Cotton futures ended at a new 15-year high on Tuesday due to steady investment fund and possible mill buying, with some analysts saying the momentum could lift values close to the psychological $1/lb mark. ICE Futures US key December cotton contract rose 1.79 cents, or 1.93 percent, to close at 94.50 cents per lb.
It was the highest close for the benchmark second position cotton contract since 1995, the only time cotton futures have traded over $1 since 1960. December traded between 92.80 and 94.85 cents. Total cotton volume traded was 17,702 lots at 2:50 pm EDT (1850 GMT), 24.43 percent above the 30-day average at 14,227 lots, preliminary Thomson Reuters data showed.
"The thing's got more upside to it," Ron Lawson, analyst for brokers logicadvisors.com in Sonoma, California, said. The catalyst came from India, whose annual monsoon rains are not expected to ease until a month later than normal, raising the prospect of delays in cotton harvesting and exports to China.
The rains could also damage open cotton bolls in India, hurting fiber quality, Lawson said. He said mills were paying up despite the historically high prices, which would normally be choking off consumption. Market bears, however, believe cotton is heavily overextended and due for a sharp correction. Shaky prospects for the US economy are likely to deflate values, they say.
Total open interest in the cotton market stood at 228,386 lots as of September 13, from the prior tally of 226,613 lots, exchange data showed. Broker Flanagan Trading Corp sees resistance for December futures at 95.10 and 96.25 cents, with support at 94.15 and 93 cents. Total volume traded on Monday hit 13,886 lots, down from the prior 14,639 lots, ICE Futures US data showed.
Comments
Comments are closed.