New York cotton ends both ways

US cotton futures settled mixed on Friday as the market tried to find its footing after another sell-off in the commodities sector this week, analysts said. The key July cotton contract on ICE Futures US increased 0.85 cent to close at $1.4515 per lb, dealing from $1.4206 to $1.4849. On the week, the market is down 0.28 percent.
The new-crop December cotton futures lost 3.58 cents or by 3.0 percent to finish at $1.1561 per lb. Volume traded stood around 14,400 lots, almost two-thirds below the 30-day norm, Thomson Reuters preliminary data showed. The weekly CFTC report showed managed money accounts increasing their net long positions in futures and options by 1,477 lots to 12,982 lots as of May 10, and non-commercial net long positions by speculators were up 1,822 lots to 25,631 lots.
"That was the (main) feature in cotton today - spread trade," said Mike Stevens, an independent cotton analyst in Mandeville, Louisiana. Investors were buying the spot July contract and selling the December contract, mainly because of belief that a major cotton merchant would decertify over 300,000 (480-lb) bales of cotton and deliver it against the board, dealers said. "The reason it is bullish for July is that it is forcing those who are short in July to cover their positions," one explained.
Sharon Johnson, senior cotton analyst at commodity brokerage Penson Futures, said reports of some rains falling in Texas probably pressured investors who were long in the December contract to dump their holdings. But she added that she is "bullish" new-crop futures because of the severe weather problems plaguing the US cotton crop. Those problems include severe flooding in the US Delta states and drought in Texas and Georgia, the top two cotton producing states in the country.
Open interest in the cotton market stood at 149,170 lots as of May 12, from the prior rally of 150,125 lots, data from the ICE Futures US showed. Open interest was at 147,578 lots on May 6, which is the lowest level since October 2009, ICE Futures US said. Volume traded in the cotton market was at 19,584 lots as of May 11, versus the previous tally of 19,551 lots, exchange data reported.