NEW YORK: Cotton futures rallied on Thursday, prompted by short-covering after a rout during the previous session that spurred buying and also supported by US government weekly export data seen as indication of solid demand, dealers said.
The most-active July cotton contract on ICE Futures US gained 1.81 cents, or 2.2 percent, to settle at 85.68 cents per pound, after earlier surging more than 4 percent to as high as 86.98 cents per lb.
It was the second-month contract's largest one-day gain since mid-March.
The day's gains helped cotton recover some of the ground lost during the previous session when the contract posted its largest daily loss in almost a year.
Mill buying came in on the price dips during Wednesday's broad commodities selloff.
"There was good business done yesterday on the break, so we had some short-covering today," said a US broker.
US export sales for the week ending April 25 reached 314,400 running bales, up 32 percent from the previous week and the most since mid-January, US Department of Agriculture data showed. The reporting week included dips to 2-month lows, which merchants had said prompted mill buying.
The figure included sales to China at 254,700 running bales, the most since September.
The data also included 138,000 bales sold to China, which had been previously booked for an optional origin, and so the weekly data was seen as solid, but in line with recent weeks, dealers said.
With domestic prices below those of some other global origins, mills in China opted in favor of US cotton.
"The export sales were pretty good and that's supporting the market. The washout yesterday was overdone," said Sterling Smith, a futures specialist with Citigroup in Chicago.
A delay in the publishing of certified stocks on ICE caused uncertainty in the marketplace on Thursday.
Exchange stocks totaled 517,083 bales as of Tuesday, according to the most recent ICE data, continuing their climb to the highest levels since June 2010.
Open interest totaled 167,013 contracts on Wednesday, up 1,348 lots from the previous day and higher for a third straight session after falling to the lowest level since December.
Cotton closed down about 4 percent in April after surging 18 percent during the first quarter and climbing to a one-year high of nearly 94 cents in mid-March.
The first-quarter rally was driven by speculators' investments, and as they reduced their bullish bets on fiber, prices have slumped.
The noncommercial dealers have been cutting their net long position in cotton futures and options from a five-year high reached in March, according to US government data.
Prior to the first-quarter surge, cotton posted two years of losses, as lower-priced, synthetic alternatives eroded demand for fiber, and global stocks grew.
Now, the world is forecast to hold record global supplies by the end of the crop year through July, though more than half of those are expected to become part of China's stocks and are considered unavailable to the global marketplace.
Beijing began buildings its reserves in 2011, paying above global prices to support farmers. The stockpiling program is continuing this year.
<Center><b><i>Copyright Reuters, 2013</b></i><br></center>
Comments
Comments are closed.