Friday, 20 March 2015 01:38
NEW YORK: Cotton futures hit a two-week high in heavy volume on Thursday after large gains during the prior session attracted technical buyers and a US government report showed strong new sales and exports in the prior week.
The front-month May cotton contract on ICE gained 0.47 cent, or 0.8 percent, to settle at 62.95 cents a lb after rising as high as 63.41 cents, the highest for the May contract since March 5.
Thursday marked the first time May cotton had risen for two straight sessions since late February. Wednesday’s “classic key reversal”, a chart pattern in which the price both drops below the prior session’s low and exceeds its high, encouraged new speculative buying, said Sharon Johnson, introducing broker with Wedbush Securities in Atlanta.
Cotton’s rise on Wednesday came as speculators covered short positions, and price moves accelerated after the Federal Reserve’s statement late in the trading session.
The market also received a boost on Thursday from a US Department of Agriculture report showing new sales of US cotton reached 238,600 bales in the week ended March 12, with exports totaling 296,000 bales.
The strong report did not come as a surprise, as prices reached one-month lows last week, attracting buyers, but Johnson said the range of different countries purchasing US cotton was an encouraging sign.
Cotton’s gains on Thursday came despite the US dollar’s rise, which can pressure greenback-traded commodities like fiber by making them more expensive to holders of other currencies, and losses in the crude oil and grains markets.
“That in and of itself adds to the impressiveness of the action here the last two days,” Johnson said. Volume was heavy on Thursday, with 25,893 contracts trading hands in the May contracts, the largest amount since Feb. 19.
Copyright Reuters, 2015
