ICE cotton ends lower on ‘disappointing’ USDA report

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* Speculative buying propels prices to 6-month highs

* No change to U.S. outlook in monthly crop report

* U.S. to plant 8 pct more cotton this year -NCC survey

NEW YORK, Feb 10 (Reuters) – Cotton futures ended lower on Monday after a “disappointing” U.S. government monthly crop report stalled speculative buying and knocked prices off six-month highs touched earlier in the session, traders and analysts said.

The most-active March cotton contract on ICE Futures U.S. rose to as high as 88.84 cents per lb, its loftiest since mid-August, on speculative buying ahead of the report and further fueled by concerns about dwindling supplies.

Prices pared gains and slipped into negative territory after the U.S. Department of Agriculture kept its outlook for domestic supplies unchanged in the report, defying expectations that it would cut its ending stock forecast.

“The market was disappointed by the lack of change to U.S. exports,” said Sharon Johnson, a cotton specialist with KCG Futures in Atlanta.

Prices settled at 87.37 cents per lb, down 0.11 percent from Friday, on healthy volume. Over 21,000 lots of March contracts changed hands on the day.

“A lower close after hitting new highs will be negative for cotton,” Johnson said.

Exchange data showed supplies have improved too, with certified stocks rising to 227,301 bales, its highest since early December and up from 216,810.

Thursday’s strong export data reinforced optimism about strong foreign demand and concerns about dwindling domestic supplies that have bolstered prices.

Traders also digested the results of the National Cotton Council’s plantings survey, the first official insight into farmers’ plans for 2014/15, which signaled higher supplies for the upcoming season which starts on Aug. 1.

U.S. farmers will plant 11.26 million cotton acres (4.6 million hectares) in 2014, up 8 percent from the previous year and slightly more than expected last month, as cotton grows increasingly competitive against corn and soybeans. (Reporting by Josephine Mason; Editing by Marguerita Choy)

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