Cotton futures closed at a 4-1/4-year high on Tuesday for the second straight day on continued fund buying and support from surging US grains, brokers said. "It got a new breath of fresh air when the grains bottomed out and then they started up, and cotton got its confidence back and started up again," said John Flanagan of Flanagan Trading Corp in North Carolina.
"It's still looked at as the undervalued commodity," he said. The ICE Futures' open-outcry May cotton contract settled 0.67 cent higher at 79.48 cents per lb, the highest close since November 2003 for the second month. Trades ranged from 77.50 to 80.25 cents.
The new-crop December cotton contract closed 0.51 cent higher at 85.03 cents. Except for the front month, all contracts hit lifetime highs. The May electronic cotton contract was up 1.39 cent at 80.20 cents at 3:09 pm EST (2009 GMT), spanning 77.20 to 80.36 cents.
The market was weak during early trade but turned higher as other US commodities, such as soybeans and wheat, soared. The Reuters-Jefferies CRB Index, which includes agricultural commodities, hit a record for the eighth straight day as US crude oil traded above $100 a barrel. Cotton's spot-month March contract was also seen contributing to the firm market.
"Obviously, some people don't want to deliver and they're buying their way out of March," Flanagan said. Open interest in the March contract fell by 1,836 lots to 3,305 lots as of February 25. First delivery date for the March contract is March 3. Pit volume Monday was 6,508 lots, while 42,824 lots traded on the screen. Open interest in the cotton market was up 6,411 lots at 286,535 lots as of February 25, exchange data showed.
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