* Dec cotton should stay in range until next USDA report
NEW YORK, May 1 (Reuters) – U.S. cotton futures scratched out modest gains on Tuesday, as speculators bought the lows after the previous session’s rout, but analysts said prices should remain in a holding pattern until the U.S. Department of Agriculture’s next supply/demand reading.
“Today is turnaround Tuesday,” said Keith Brown at Keith Brown and Co. brokerage in Moultrie, Georgia, noting steep losses in the previous session after India announced it would lift an export ban on its huge volumes of cotton.
July cotton on the ICE Futures U.S. exchange ended 28 cent higher at 89.68 cents per lb, after trading in a fairly narrow range from 89.03 to 89.92 cents a lb.
Late-session volume came to 7,557 lots in the benchmark contract.
Brown said the increase in July prices reflected traders’ desire to grab the fiber the day after prices fell to their lowest levels in nearly two weeks, given the tight U.S. stock levels estimated by USDA in its last supply/demand report.
Traders saw value a day after July cotton slid more than 2 percent on speculative selling after India’s announcement.
On Monday, the world’s No. 2 cotton producer said it would allow cotton exports without any restrictions, lifting a ban imposed last month to support domestic mills, but which hurt India’s farmers.
“Adding to the tragicomedy is USDA claiming India still has a lot of cotton in warehouses,” said Brown.
Traders sold heavily on Monday believing the sizeable new supply from India would flood the global market.
“India will undercut U.S. prices, which will make it difficult for U.S. prices to rise,” said John Flanagan, analyst at Flanagan Trading Corp in North Carolina.
New-crop December settled 0.02 cent lower at 86.94 cents, after trading in a band from 86.22 to 87.08 cents.
Analysts said December’s losses reflected increased planted acres, with Flanagan noting that the latest U.S. planting progress report showed planted cotton acres reached 26 percent by last week compared with average progress of 19 percent in that same period over the last 5 years.
“We’re not sure how many acres will get planted at this cheap price,” said Brown, adding that year-ago cotton prices were $1.27 per lb that are currently running around 86 cents.
“Are the farmers going to plant fence-row to fence-row? No.
So, I think the market’s in a holding pattern here and we’ll wait until the next USDA (acreage) report to decide whether to go up or down,” said Brown.
While farmers are planting cotton now, he said optimum planting time lasts until mid-June so there is still time to switch crops. With soybeans running around $14 to $15 a bushel and dry conditions in many areas of the cotton belt, December cotton plantings and therefore losses should be limited.
The U.S. Agriculture Department’s monthly supply/demand report due next week will show the first estimate of market conditions in the coming 2012/13 marketing season (August/July).
Monday’s trading volume was 25,268 lots, about 5 percent over the 30-day norm, according to Thomson Reuters data.
Open interest fell by 1,814 lots to 180,668 lots as of April 30, ICE Futures U.S. exchange data showed.
(Reporting by Carole Vaporean; Editing by David Gregorio)