US cotton futures closed up their daily trading limit on Tuesday as modest investor buying was featured in otherwise subdued dealings, analysts said. The key May cotton contract on ICE Futures US rose the 7-cent limit to end at $2.0596 per lb, with the session low at $1.9743. The contract has been limit-up in three of its last four sessions.
Volume of around 14,400 lots was over 50 percent below the 30-day norm, Thomson Reuters preliminary data showed. Open interest, an indicator of investment exposure, stood at 174,321 lots as of March 21, still near its lowest point since late July 2010, data from ICE Futures US showed. Traders said most interest in cotton was from speculators and many players were focused elsewhere.
"We're starting to think of the plantings number," said Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia. He said the influence of geopolitical factors like the fighting in Libya or the severe disasters which struck Japan seem to be receding in the minds of market players as attention begins to turn toward the plantings data. The US Agriculture Department will release its closely watched annual potential plantings report on March 31 for crops including cotton, corn, soybeans and wheat.
The USDA report will be its first survey of likely plantings for major row crops in 2011. Despite the rally in cotton to record highs, the fibre will compete for acreage against similarly high-priced grains this year. Analytical firm Informa Economics projected on Friday US farmers will plant 13.13 million acres to cotton, which would be the most in five years.