US cotton futures settled with healthy gains on Tuesday, reversing small losses in the last minutes of trade, as investors saw an opportunity to buy in a tight market when prices fell briefly before the close. Concerns about global cotton supplies kept prices propped up for most of the session, as some investors focused on flooded cotton crops in Australia and dry conditions in Texas growing regions, among other concerns, brokers said.
Benchmark March cotton contracts on ICE Futures US finished with 1.11 percent gains at $1.4378 per lb, up 1.58 cents. The contract advanced to a high at $1.45 shortly before the close, up from the day's low at $1.3980, last seen December 30. Volume firmed to 8,818 for the March contract, greater than the 6,823 contracts traded on Monday. Monday's total tally came to 11,541 lots, according to ICE data. May cotton also rallied to close 1.59 cents, or 1.17 percent, higher at $1.3789 per lb.
Cotton stood its ground for most of the day, unlike other commodities prices, which fell sharply as sellers felt the thin pre-holiday trade had taken the complex up too far, too fast. But, late in the day, cotton prices, too, succumbed to the downdraft among most other commodities, as investors sorted out the impact of a rebalancing of major commodity market indexes with the start of a new trading year. Once cotton prices slipped, however, some speculators swept in and snapped up March and May contracts, sending them to new session highs shortly before the close. Cotton brokers were somewhat perplexed at who the actual late-session buyers were, but said the last stretch to the day's highs were won when stop-loss buy orders were triggered.
Bill Raffety, senior analyst for futures brokerage Penson GHCO in New York, pointed out that US cotton supplies for March delivery have been tight for some time and that an International Cotton Advisory Committee report emphasised tight conditions in several top growing nations.