Friday, 13 March 2015 00:59
NEW YORK: Cotton on ICE Futures U.S. rose on Thursday, ending the longest rout since late 2013 as chart signals curbed investor liquidation and low prices revived demand from mills.
The front-month May cotton contract on ICE slipped to a five-week low of 60.26 cents a lb, then rallied to close up 0.89 cent, or 1.5 percent, at 61.22 cents.
The contract had closed down for ten straight sessions prior to the recovery.
Short-term indexes placed the contract in oversold territory, with a relative strength index below 30, suggesting cotton prices have fallen too quickly from February highs.
“Cotton is profitable here. There were some technical signals that may have caused the spec(ulators) to stop liquidating,” said Louis Rose, an independent cotton trader and consultant at Risk Analytics in Memphis, Tennessee.
Demand hopes fueled the gains. Sales of U.S. cotton picked up last week, the most recent government data showed, although orders for some 25,000 running bales destined for Turkish buyers were again canceled, weekly U.S. Department of Agriculture (USDA) data showed.
The report was largely in line with expectations that mills had returned to the market. Traders expected to see another pick-up in next week’s report.
Copyright Reuters, 2015
