US cotton futures settled slightly firmer on Friday on late trade and consumer buying in a market that remained fundamentally bearish, analysts said. The benchmark May contract on ICE Futures US rose 0.14 cent to finish at 87.48 cents per lb, dealing from 87 to 88.17 cents. The 117 point range was smaller than the 119 point band seen in Thursday's 87.07 to 88.26 cents range.
For the week, the market was down 1.5 percent. Volume traded came to over 13,000 lots, over 50 percent under the 30-day norm, Thomson Reuters data showed. Technically, the May contract slipped one tick under the March 12 intraday low at 87.01 cents, but this area of 87 cents has held in cotton since late December 2011.
"The bears have a good grip on this thing," said Mike Stevens, an independent analyst in Louisiana. He was referring to a world cotton supply balance that is notably bearish. The US Agriculture Department monthly supply report last week increased its world 2011/12 cotton production forecast to 123.64 million 480-lb bales from 123.34 million, and cut its projection of world consumption to 108.72 million bales from 109.71 million. It raised its forecast of world end-of-season stocks to 62.32 million from 60.77 million bales. The 2011/12 marketing year ends on July 31. But every time cotton would be ready to drop, trade and mill buying would show up to lift fibre contracts. There is demand all the way down and that is keeping it (cotton futures) from falling apart," explained Stevens.
The fibre trade is now waiting for news from India, which is prohibiting fresh cotton exports. India is the world's No 2 cotton producer and the biggest exporter after the United States. In two weeks, the market will be looking at the USDA's annual potential plantings report, which will set the table by providing a baseline figure for US cotton sowings in 2012.