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| 10 April 2005 | Sunday | 30 Safar 1426 |
New York cotton settles firmer on trade buying, switches
The New York Board of Trade’s key May contract rose 0.99 cent to close at 53.21 cents a lb, ranging from 51.52 to 53.40 cents. July added 0.90 to 54.86 cents. The rest rose 0.45 to 0.65 cent.
We’re just marking time and liquidating the May contract, said Sharon Johnson, cotton expert for Frank Schneider and Co. Inc. in Atlanta, Georgia.
On switch trade, open interest in May dove 4,805 lots to 58,379 lots as of April 7 while interest in July rose 4,287 to 40,962 contracts.
Johnson, though, expressed concern over the pace of the rollover because there are only 10 sessions left before May goes into delivery.
Trade and speculative buying buoyed cotton as the market quickly reversed an early probe of its session lows.
Johnson said trade buying provided support for cotton and then the speculative accounts picked it up from there.
Fundamentally, cotton has bucked large cotton crops to stay above 50 cents, basis the spot month, due to steady purchases by consumers and expectations by the trade of lower cotton plantings from major producers in the 2005/06 season.
Analysts said US Department of Agriculture’s monthly supply/demand report went up as expected. World cotton output was raised to 119.22 million (480-lb) bales from 117.71 million last month and consumption rose to 107.05 million from 106.16 million.
On the US side, all the figures were kept unchanged except for output which was increased marginally by the USDA to a record 23.08 million from 23.01 million last month.
Brokers Flanagan Trading Corp. put support in the May contract at 53.10 and 52.50 cents, with resistance at 54.20 and 54.75 cents.
Floor dealers said estimated volume stood at 19,000 lots, off from Thursday’s count of 22,639 lots. Open interest fell 389 contracts to 118,435 lots as of April 7. —Reuters
The trading range for the week was established last Monday when the market traded a range of 280 points.
The market gained 50 points on the week as the Friday high was actually 5 points higher than the Monday high. A 50-55 cent trading range appears in control as traders search for new fundamental information to move prices in either direction.
The April Supply Demand Report provided scant new fundamental news. Look for the five-cent trading range to bracket the market. Excellent demand continues to surface near the low end of the range while the trade and funds, looking to take profits, become heavy sellers near the top.
USDA adjusted its estimate of world production and demand from its March estimates.
However, the changes were already in the market, as most traders had previously suggested the changes would be made.
The estimate of the world crop was increased about 1.5 million bales, up to 117.7 million bales.
This was due primarily to an increase in both the Indian and the US crops.
—Reuters
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