US cotton futures finished higher on Monday on speculative and possibly some mill buying, but business was moderate as most players awaited release of a key government crop report this week, traders said. Benchmark March cotton contract on ICE Futures US increased 2.65 cents to conclude at $1.4325 per lb, trading from $1.405 to $1.446.
"It's really lethargic," Lou Barbera, cotton specialist at commodities brokerage VIP Commodities, said. "It's more a lack of trade selling than quality buying." The level of interest by players was reflected in the volume of business. Contracts traded stood at around 16,700 lots, about 10 percent below the 30-day norm, Thomson Reuters preliminary data showed.
Analysts said most market players were apparently sitting back to wait for release of the US Agriculture Department's monthly supply/demand report on Wednesday at 8:30 am EST (1330 GMT). Cotton industry analysts said the market will watch for any significant changes to world cotton supply figures, especially the numbers being released on China, the world's top consumer, and India, the No 2 producer of the fibre.
Another factor would be the rebalancing by index funds who will be reducing risk from cotton and other overly-weighted agriculture markets and adding exposure to natural gas and crude oil. The rebalancing runs between this week and next. Investment bank J.P. Morgan Chase has estimated that nearly 14,000 cotton contracts could be offloaded under the exercise, which may pressure cotton futures despite bullish market fundamentals.
Comments
Comments are closed for this article.