US cotton futures finished higher Friday on investor short-covering by players worried about a historic drought in the key growing state of Texas ahead of a holiday weekend, brokers said. The cotton market will be closed Monday for US Memorial Day. Trading resumes on Tuesday.
The benchmark December cotton futures on ICE Futures US went up 1.93 cents to finish at $1.295 per lb, dealing from $1.2741 to $1.30. On the week, the market is up 8.13 percent. Spot July cotton added 1.64 cents to close at $1.5267. Total volume traded reached over 9,500 lots, about 50 percent below the 30-day norm, Thomson Reuters preliminary data showed. "We're covering because we see the intensity of the Texas drought and we see no relief in sight," said Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia.
The worst drought in a century in Texas may force farmers there to abandon up to a third of the crop unless bumper rains drenched the state for days soon. The National Weather Service forecast for the next 7 days showed sunny and hot weather in Lubbock, Texas, in the heart of the US cotton belt. Forecaster Telvent DTN said Texas cotton growing areas should see dry conditions with the chance of a few light showers on Monday.
"US (cotton) production has been compromised and perhaps in a very profound manner if weather over the next two weeks plays out as forecast," Sharon Johnson, senior cotton analyst for commodities brokerage Penson Futures. Volume stood at 19,974 lots as of May 26, versus the prior tally of 21,654 lots, ICE Futures US data showed. Open interest was at 154,213 lots as of May 26, versus the previous tally of 154,764 lots, according to the exchange.
Comments
Comments are closed for this article.