ICE cotton futures inched higher on Friday to settle up for a third straight session on expectations of short-covering by mills, ahead of the first notice day for the March contract. "The overwhelming amount of mills shorts that are still in the front month are supporting the prices. These are all mills shorts which will be forced to act before the first notice day," said Louis Barbera of ICAP Cotton.
However, the rolling of March longs by speculators and index funds have limited the gains, according to Louis Rose, an independent cotton trader and consultant with Risk Analytics in Memphis. The March cotton contract on ICE Futures US ended the week down 0.8 percent after three consecutive weekly gains.
"The weak appearance by the market late last week and early this week may have given mills (false) hope that prices are about to collapse, which has prompted many of them to pull back their buy scales," said Peter Egli, director of risk management at British merchant Plexus Cotton in a note.
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