NEW YORK, Nov 23: NY cotton futures prices finished higher on Friday as last-minute rollovers into the March contract lifted prices in light volume, despite bearish weather for crops in the Delta and West Texas.
In the regions where the cotton is grown, the weather has been incredibly conducive for a healthy harvest, with better-than-expected yields on crops in the Delta and West Texas, said Alan Feild cotton broker at iamhedged.com.
March cotton closed up 0.07 cent at 50.65 cents, moving from 50.34-51.00 cents a lb, while December cotton gained 0.16 cent to settle at 47.29 cents a lb, in a 47.00 cents to 47.69 cents trading band. The rest of the board settled from 0.25 to 0.40 cent higher.
Estimated volume for New York cotton No. 2 was 4,000 lots, versus a prior tally of 7,384 lots.
Export sales as of Thursday were beneath where they would need to be to meet USDA forecasts, traders said.
Exports were bad this week. If it weren’t for China it would be really bad. We’re about 2 million bales behind USDA estimates right now. It’s just bearish, said Feild.
After the close, the CFTC reported the Commitment of Traders data for the week ended last Tuesday. The latest data showed funds were net long cotton futures by 22,402 lots, up from 20,157 in the previous week.
Speculators held net long positions of 8,885 lots in cotton, also higher than the 8,427 net longs a week earlier.
Funds are really long. They can’t get much longer, so that means there will be that much more selling on Monday and Tuesday, said one cotton broker.
We finished today on a defensive note, and we didn’t trade well yesterday. We made a new low versus the previous day and lower highs. It failed at 51.0 cents (the March contract high). There was heavy scale up trade selling—50 to 100 contracts to sell every five points, a broker said.
Also on Friday, the NYBOT said it raised both speculator and hedger margin requirements for cotton futures.
Some cotton experts said the increased margins could serve as a negative on prices if speculators start dumping long positions to bring their holdings to more normal levels.
There are a lot of specs out there that can throw a lot of positions around, but now it will cost you more to hold a losing position, said another trader.
Open interest in the cotton market fell 761 lots to 79,257 lots as of Thursday.
Support for the March contract was pegged between 50.0 and 50.15 cents a lb., then 49 cents and 48 cents a lb.
Resistance was seen at Friday’s high of 51.30 and 51.70 cents on March futures. One trader noted that the market gets slammed each time it reaches for a new high.
Flanagan said he sees resistance in the December contract at 51.80 and 52.30 cents a lb with support at 49.60 and 48.80.—Reuters