Cotton futures closed the week strong, holding solid gains to the finish, despite selling in other commodities and tepid weekly export data, as a drought and a healthy US jobs report supported the longer-term view. Benchmark March cotton futures ended the week at their second highest level since November 17, rising 1.12 cents to settle at 95.86 cents a lb.
It peaked at 95.92 cents for the second day in a row. On the weekly chart, cotton posted its highest closing since the week of November 11. "We closed up more than 4 cents from last Friday and we held onto most of those gains today. Even more significant, cotton did this all by itself. It did not have help from outside commodity markets, many of which were down," said Sharon Johnson, senior cotton analyst at Penson Futures in Atlanta.
Though volume was light at 7,416 lots in the March contract, Johnson noted that roughly 1,000 contracts per day this week related to commodity index rebalancing. Though not a huge amount, she said index purchases contributed to cotton's gains. Cotton was widely thought to have been oversold in December and brokers said this week's rally was overdue.
On December 14, cotton fell to its lowest level in more than a year. The benchmark March contract climbed more than 1,200 points from that low, advancing 450 points this week. Total volume traded Thursday fell to 14,617 lots, from 20,174 lots on Wednesday, ICE Futures US data showed. Open interest, an indicator of investor exposure, eased to 147,711 lots on Thursday from 147,966 lots on Wednesday.