US cotton futures closed higher Thursday on late speculative and trade buying as the paucity in nearby supplies and steady fibre demand kept the market firm and near record highs, analysts said. The key May cotton contract on ICE Futures US rose 5.10 cents to finish at $2.057 per lb, dealing from $2.006 to the 7-cents limit up at $2.076.
Volume traded Tuesday though stood about 26,800 lots, about 13.0 percent below the 30-day norm, Thomson Reuters preliminary data showed. Despite the robust level of cotton prices, open interest in cotton stood at 174,733 lots as of March 2, barely higher than the 7-month low at 174,074 lots as of Feb. 28, data from ICE Futures US showed.
Mike Stevens, a long-time independent cotton analyst in Louisiana, said the market lacked direction even after key May hit the daily limit up in Thursday's session. "It just kept going back-and-forth," he said. Analysts said some encouragement was provided by the weekly export sales report from the US Agriculture Department.
USDA said total US cotton sales hit 411,600 running bales (RBs, 500-lbs each), much higher than trade estimates it would run from 200,000 to 250,000 RBs. Last week, sales stood at 275,100 RBs. Stevens said the strong sales helped explain why the market turned around strongly last week to charge again over $2 a lb. Analysts believe the high cotton prices would enable the fibre to compete against higher-priced grains although the weather will be a major factor in the battle for acreage during the US spring 2011 planting season.
The market will focus on the USDA's monthly supply/demand report next week and then the vital USDA potential plantings report on March 31, the first government indication of likely plantings for crops like cotton, corn, soybeans and wheat this year.
Comments
Comments are closed for this article.