NEW YORK: Cotton futures rose on Thursday and were on track for their first weekly gain in a month as buyers were encouraged by an increase in US weekly export sales and a weakening US dollar.
The most-active July cotton contract on ICE Futures US settled up 1.35 cents, or 1.6 percent, at 84.87 cents a lb.
The front-month contract's current trajectory would result in a weekly gain of about 7 percent, which would be its steepest since October.
Prices turned higher, reversing earlier losses, following the release of US Department of Agriculture weekly export data, which showed an uptick in both sales and shipments in the week ending May 30.
The tumbling US dollar added support, making dollar-traded commodities less expensive to holders of other currencies.
Dealers said they had expected an increase in US weekly exports as prices dropped nearly 80 cents in that period, which prompted mills to increase purchases.
The data "was strong, though not surprising at all. Mills have been buying like crazy," said Peter Egli, director of risk management for Plexus Cotton Ltd, a British-based medium-sized merchant.
Sales increased 80 percent from the prior 4-week average, as gains in Vietnam, China, Turkey, Taiwan and Indonesia offset cancellations by Morocco and El Salvador, the data showed.
China topped the list of shipment destinations, indicating continued strong demand from the world's largest textile market.
Dealers said that the country's reserve sales have also increased in recent days.
Beijing began a stockpiling program in 2011, paying above global prices to support farmers. The country is now expected to hold more than half of global inventories by the end of the crop year through July. News of overnight rains in drought-plagued west Texas, a key growing region in the world's top exporter, capped gains for the new crop.
ICE December cotton futures, which represent the new crop, edged up 0.49 cent, or 0.6 percent, to finish at 85.39 cents per lb.
The July/December spread narrowed to 0.52 cent from 1.38 cents during the previous session and 2.7 cents a lb last week.
Trading was heavy and featured rolling activity ahead of the July contract's expiration on July 9. Volume was double the 30-day average at 32,000 lots, preliminary Thomson Reuters data showed.
Exchange stocks rose to 523,476 bales on Wednesday, ICE data showed, the highest since June 2010.
Comments
Comments are closed.