NY cotton ends at 10-day peak on funds, firm markets

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* Rollovers, short-covering power market up

* Cotton still pinned between 87 to 94 cents

* Firm stock and grain markets inspire

NEW YORK, April 12 (Reuters) – Cotton futures surged to their highest close in 10 days on Thursday, mainly due to investment funds rolling long positions to back months and some outright speculative short-covering inspired in part by strong outside markets, dealers said.

The benchmark May cotton contract on the ICE Futures U.S. exchange rose 1.62 cents to finish at 93 cents per lb, dealing from 91.10 to 93.30 cents. It was the loftiest close for cotton in 10 days, according to Thomson Reuters data.

The May contract closed above the 100-day moving average of 91.74 cents, but the 200-day MA of 99.19 cents remained out of reach, the data showed.

The market has traded in a wide band from 87 to 94 cents, basis the spot contract, since the start of March, Thomson Reuters data showed.

Thursday’s estimated volume reached slightly over 40,100 lots, some two-thirds above the 30-day norm but down from the prior session’s 49,751 lots, according to ICE Futures U.S. and Thomson Reuters data.

“They’re not trading fundamentals today,” said Sharon Johnson, senior cotton analyst at commodities brokerage Penson Futures in Atlanta.

She said investors are concentrating on rolling positions out of May and into the back months.

“They have a game plan…(it is) short-covering and rolling,” Johnson explained.

Mike Stevens, an independent analyst in Louisiana, said most of the market’s strength “is coming from the index funds. There are a total of 26 different indexes … of those, 14, including Goldman (the biggest), are rolling out of May this week.”

The weekly export sales report from the U.S. Agriculture Department confirmed market talk that the pace of Chinese buying has markedly slowed after Beijing was said to have concluded its restocking of cotton for state reserves at the end of March.

The Chinese were not net buyers of U.S. upland cotton, the most common variety, although 108,600 running bales (RBs, 500-lbs each) of cotton which had been bought were shipped last week.

Stronger global stocks and grain markets  lent a positive tone to cotton futures, traders said.

Open interest stood at 185,708 lots as of April 11, down from the 193,427 lots as of April 5, which was the largest number of open cotton futures contracts since Feb. 15, 2011, ICE Futures U.S. exchange data showed.

(Reporting by Rene Pastor; editing by Jim Marshall)

Source: http://www.reuters.com/article/2012/04/12/markets-cotton-idUSL2E8FCJQ720120412

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