US cotton futures finished easier after late investor profit-taking in subdued dealings on Monday, back-pedalling from a one-week high reached earlier in the session. The key May cotton contract on ICE Futures US shed 0.16 cent to close at $1.9896 per lb, moving between a low of $1.9735 an $2.0488, last seen on March 14. The last two sessions, the contract had risen by the 7-cent daily limit.
Open interest, an indicator of investment exposure in cotton, stood at 173,119 lots as of March 18, a level that is still near the lowest since late July 2010, data from ICE Futures US showed. Volume traded stood at 14,000 lots, over 55 percent below the 30-day norm, Thomson Reuters preliminary data showed. "We've gone absolutely nowhere," said Mike Stevens, an independent analyst in Louisiana.
He said the market would run into commercial sales and investment fund profit-taking once the old crop May and July contracts go above the psychological $2/lb level. The next bit of information which will provide direction for cotton futures would be the potential plantings report by the US Agriculture Department due out on March 31.
That is the first government survey of likely plantings for major row crops like cotton, corn, soybeans and wheat in 2011. Despite the rally in cotton, the fibre has to compete for acreage against similarly high-priced grains this year. Analytical firm Informa Economics projected on Friday US farmers will plant 13.13 million acres to cotton, a level that would be the highest in 5 years.
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