Cotton futures settled firmer Thursday on combined speculative and suspected consumer buying, with a government export sales report giving the market a boost, analysts said. The benchmark May contract on ICE Futures US rose 1.27 cents, or 1.44 percent, to end at 89.58 cents per lb, dealing from 88.05 to 89.74 cents.
Volume traded Thursday amounted to slightly under 18,500 lots, about a quarter under the 30-day norm, Thomson Reuters data showed. The US Agriculture Department's weekly export sales report showed net upland US cotton sales stood at 197,000 running bales (RBs, 500-lbs each), which is up 30 percent on the 4-week average. Cotton export shipments hit 297,100 RBs.
The top buyer and destination remained China, the world's leading consumer of cotton. Many market participants have forecast that prices should weaken given projected increases in production and cotton stocks in the upcoming 2012/13 season. "The (cotton) market may have discounted the bear stuff," said Mike Stevens, an independent cotton analyst in Louisiana.
Another dealer said cotton futures have found solid support at 87 cents, basis May, because it is an area where mill and trade buying has shown up. Open interest, an indicator of investor exposure, rose for the 10th straight session to 189,093 lots as of March 21, the highest since February 14, ICE Futures US data showed.
Investors will be looking at the weekly US CFTC report to see if investors continued increasing short positions in the cotton market. The report is due out Friday. Last week, the CFTC said net short positions in the cotton market stood at 7,553 lots, against a net long position of more than 14,000 lots at the start of February.