Cotton futures finished with small gains on Monday on buying by small investors although fibre contracts were off their session highs after initial advances ran out of gas, analysts said. The key March cotton futures rose 0.48 cent to end at 91.35 cents per lb, moving from 90.85 to 92.81 cents. The range was almost comparable to Friday's 90.01 to 91.89 cents band.
Total volume traded on Monday was over 9,600 lots, almost 60 percent below the 30-day norm, preliminary Thomson Reuters data showed. "I think the bounce ... was due to the weaker dollar and strong outside markets. And then it just kind of faded," said Mike Stevens, an independent cotton analyst in Louisiana. A softer dollar would often make dollar-denominated commodity products cheaper for investors.
World stocks jumped and commodity prices also rose as optimism grew that European leaders were readying a plan to resolve the region's long-running debt crisis. Traders said cotton futures were being supported partly by the buying of China, the world's top producer and consumer of cotton, over the past few weeks. In the last three weeks, the US Agriculture Department's weekly export sales report said China has bought over 2.3 million running bales (a bale=500 lbs) as it replenishes state stocks which have been run down to keep domestic prices stable.
Open interest in the cotton market, usually taken as an indicator of investor exposure in the market, stood at 137,009 lots as of November 25, from the prior session's tally of 136,858 lots, exchange data showed. Total volume traded Friday in the market reached 8,547 lots, from the previous tally of 14,825 lots, ICE futures US data said.