Cotton Review: Up Slightly; Traders Spread Contracts
DOW JONES NEWSWIRES
Nybot cotton futures closed slightly higher on spread-related trades, with little outright business conducted, an analyst said Friday. Most of the volume occurred on the December/March switch.
December cotton rose 3 points to settle at 49.21 cents and March was up 8 points to 53.35.
"For the most part this was a typical Friday," with light volume and little fresh news available to influence prices, said Jeff Driver, crop marketing consultant at Iamhedged.com in Memphis.
On the options, a few large traders bought July calls, he said.
Cotton has been battling the row-crop markets for acres, and the row crops are winning.
"Beans are high, corn is high, wheat's following and cotton has to rally at some point or nobody's going to plant cotton. You're losing acres in Texas, you're losing them in the South - I mean corn's already made new contract highs recently," Driver said.
A key component of the cotton market, exports, have been lethargic and are giving traders no incentive to sustain rally attempts.
"With world supply and demand very near in balance, there appears to be little support to move to the upside," professor emeritus at Mississippi State University and cotton expert O.A. Cleveland said Friday in his commentary.
"Too, as certificated stocks continue to build and the export demand for U.S. cotton continues very weak, fundamental market considerations suggest a tad bit lower prices," he said.
The market has been stuck recently in the lower end of the trading range, as traders roll positions from December to March ahead of the Goldman Roll, which begins on Tuesday.
The market will have fresh crop production and supply/demand data from the Agriculture Department on Thursday, followed by first-notice day for December futures on Nov. 22.
Technically, the market finds trendline and psychological resistance intact at the key 50.00 cents level. More immediate resistance is pegged at 49.40 and 49.70. Support on December is uncovered at 48.76, 48.40 and 48.08-07.
U.S. certificated stocks as of Nov. 2 rose to 784,276 500-pound bales, from 780,267 bales on Nov. 1, Nybot reported. There were 58,267 bales awaiting review.
Nybot futures volume was estimated at 17,000 contracts, with 5,800 calls and 1,680 put options traded.
In other markets, December crude oil on the New York Mercantile Exchange rallied $1.26 to $59.14 a barrel. December gold was $1.40 higher at $629.20 an ounce.
The U.S. dollar was strong against the world's major currencies.
The Reuters/Jefferies Commodity Research Bureau Index was up 2.27 at 309.91.