US cotton futures ended up for the first time in five trading sessions on Monday, influenced by strength in the grains markets and ongoing concerns about drier weather in the Southern part of the country. Cotton's gains bucked the trend in the broader softs complex, which came under pressure from Standard & Poor's negative outlook on the United States' top-notch credit rating.
As fears about the US's long-term debt escalated, investment money flows began to funnel back into some commodity markets as a hedge against inflation, dealers said. "The commodities ownership theme is still alive and well," said Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia. The front-month May cotton contract on ICE Futures US firmed 0.93 cent to end at $1.9645 per lb. Most-active July closed up 0.76 cent at $1.7816 per lb, after dealing between $1.7316 and $1.7980. New-crop December cotton rose 1.45 cents to $1.3063.
Trading volumes picked up from last week. More than 31,800 lots were traded by the close, more than 20 percent above the 30-day norm, Thomson Reuters preliminary data showed. Cotton received a boost from the firmer grains markets, where US wheat futures jumped more than 4 percent as dry weather threatened crop prospects in top producing nations, including the United States.
These weather-related concerns have been very apparent in Texas, the biggest cotton producing state in the US. Forecaster DTN Telvent sees mostly dry conditions through Wednesday, with temperatures near to above normal. "Dryland cotton through south Texas is stressed due to lack of moisture. Field preparation is active through West Texas where more rain is needed," DTN said in a daily report.
Looking at supplies, domestic cotton arrivals in Indian spot markets till April 17 in the 2010/11 season edged up 2.2 percent on year, state-run Cotton Corp of India said on Monday. India is the world's second-biggest cotton producer. Open interest in the cotton market stood at 191,919 lots as of April 15, down from a previous 194,708 lots, data from ICE Futures US showed.
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