Cotton futures ended mixed on Friday, with the spot May contract off over 1 percent as rollovers heated up ahead of its delivery period next week and investors sought further clarity on China's plantings. Cotton posted its second-straight week of gains in choppy trade, recovering from Monday's 4-cent daily limit plunge to a near four-month low to bounce limit-up on Wednesday, back above the 90-cent level.
The July cotton contract on the ICE Futures US exchange rose 0.29 cent to end at 91.01 cents per lb, after moving between 90.03 and 91.24 cents. On a benchmark basis, the spot May contract has been mired in a range between 87 and 94 cents since the start of March, Thomson Reuters data showed. This week's volatility was driven in part by the prospects of a busier delivery period in the May contract, said Mike Stevens, an independent cotton analyst in Louisiana.
"The prospect for excitement in May cotton deliveries lost most of its suspense this week when a big volume of open interest disappeared," he said. Open interest in the May contract plummeted 6,790 lots on Wednesday. Another 2,858 lots were shed on Thursday, bringing total interest in May to 4,538 contracts.
"What happens in the May delivery will dictate how much cotton there is left to tender on July and either build a fire under the July/December or defuse it." Friday's estimated volume slowed to about 13,500 lots, down more than half the 30-day norm, according to Thomson Reuters data. Prices, especially new-crop December, have been pushed and pulled by uncertain prospects regarding China's planting intentions.
According to a survey by the country's Agriculture Ministry, Chinese cotton sowings may fall some 4 percent in 2012. The China Cotton Association has said it expects cotton acreage to drop by 16.7 percent. Open interest rose 185,487 lots as of April 19, from the prior day's 184,636 lots, ICE Futures US exchange data showed.
Comments
Comments are closed for this article.