June 20, 2012

US July cotton futures rises as much as 3.7%

In the past two trading sessions, July cotton futures in the US have made huge gains and rose by as much as 3.7% on Monday (June 18), crediting the strength to higher US export commitments, according to analysts.

July cotton CTN2 +3.75% was last up nearly 3 cents, or 3.7%, to 82.95 cents a pound in New York. December cotton CTZ2 +1.65% , which is the most-active contract, traded at 71.66 cents a pound, up less than a penny, or 0.8%.

Weather concerns in India and the US, to a lesser extent, aided cotton's price climb, said Chris Kraft, a futures trader and private investment manager in Nashville, Tenn., as did a "continuation of huge export commitments from last week."

The market may see "some cancellations if the global economy doesn't stabilise," he said.

There was a huge export sale to China announced last week, with a stipulation that the cotton be shipped by July 31, according to Mike Stevens, a Louisiana-based, independent cotton analyst.

As a result, several things could happen from here, he said. There could be a "squeeze on July cotton, a big cancellation of sales or a move forward for sales into a new crops, "but only after shorts in July had been killed," he said. The "story is still unfolding."

Weekly export sales of 799,500 running bales for delivery this season raised 2012-2013 commitments to 13.065 million bales, according to Stevens. That's 16% above the upwardly revised USDA projection, he said.