NEW YORK: ICE cotton futures gained over 3% on Tuesday, on mill fixations and expectations supplies will remain tight as forecasts pointed to dry weather in West Texas, the largest U.S cotton-producing region.
Cotton contracts for May rose 2.04 cent, or 2.6%, to 79.92 cents per lb by 2:02 p.m. EDT (1802 GMT), having gained as much as 3.9% earlier in the session. Prices traded within a range of 77.7 and 80.88 cents a lb.
“We are seeing a little speculative buying return to the market... we probably saw some overnight export business and some mill fixations,” said Jim Nunn, owner of Tennessee cotton brokerage Nunn Cotton, adding that a dry weather outlook in West Texas could have spurred some speculative buying.
The US Department of Agriculture’s (USDA) weekly crop progress report on Monday showed the cotton crop was 6% planted in the week ended April 4, 1% below the same week a year-ago.
Aiding the natural fibre’s rise, the dollar slipped 0.7%, lowering the cost of cotton for buyers holding other currencies.
Cotton prices could rebound further in the near-term but the rebound will likely be capped by 5 cents as the fear over export cancellations will likely keep merchants from “aggressively” purchasing the natural fibre, said Keith Brown, principal at cotton brokers Keith Brown and Co in Georgia.
Total futures market volume rose by 16,012 to 42,021 lots. Data showed total open interest gained 1,447 to 228,607 contracts in the previous session.