Cotton futures settled higher on Monday on speculative buying and switch business as players stepped up their transfer of positions out of the spot contract before it goes into delivery later this month, dealers said. The US cotton market was shut on Friday for the Easter break. The benchmark May cotton contract on the ICE Futures US exchange rose 0.94 cent to finish at 89.48 cents per lb, dealing from 88.50 to 90.24 cents.
Monday's volume reached almost 32,200 lots, about a third above the 30-day norm, Thomson Reuters data showed. Of the total, some 29,300 lots were May and July contracts. Traders said that indicated the extent to which switch trade served as the main feature of market activity.
Mike Stevens, an independent analyst in Louisiana, said fund rollover of positions had dominated business. "Spot May will stay in focus as first notice day is now only 11 sessions away. It has been pointed out that May open interest is possibly dropping a bit slow given the active volume in that contract. May options expire Friday so some of the positions may be to offset option positions," Stevens said in a weekly report.
Traders said the market would be looking to a monthly supply/demand report due on Tuesday from the US Agriculture Department to see whether the government would increase its estimate of US cotton exports. Later in the week, the trade will examine the USDA's weekly export sales report to gauge demand for US cotton. Open interest stood at 193,427 lots as of April 5, the highest level since February 15, 2011, ICE Futures US exchange data showed.
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