NY cotton at 4-month high; breaks 90-cent barrier on tight supply


Feb 24 (Reuters) – New York-traded cotton futures hit four-month highs on Monday, piercing the 90-cent/lb psychological mark, after an absence of physical delivery against the front-month contract indicated supply of the fiber was even tighter than thought.

The market also saw support from the dollar’s slide as news that Ukraine might receive international aid for its debt crisis reduced safe-haven bets placed on the dollar. The dollar edged lower against the so-called commodity currencies of Australia, Canada and New Zealand, bolstering commodity prices in general.

The most-active May cotton contract on ICE Futures U.S. settled up 0.84 cent, or 1.1 percent, at 89.30 cents a lb. The session peak was 90.44 cents, the highest achieved by the second-month contract since August 20.

The front-month March contract closed up 0.60 cent, or almost 1 percent. The contract is due to expire March 7 and saw its first notice for physical cotton delivery on Friday.

“We’ve had zero deliveries against the March contract,” said Keith Brown, principal at Georgia-based cotton brokers, Keith Brown & Co.

“Either there is no willing deliverers of cotton or maybe there’s no cotton to deliver at all, whichever case is bullish.”

Monday’s session was the second in a row where cotton rallied. On Friday, the market rose after players looked beyond a drop in weekly U.S. exports to focus on inventory levels that were expected to stay tight due to lower output.

The U.S. Department of Agriculture said on Friday that export sales of 2013/14 cotton totaled 78,200 running bales last week, well below the previous week’s tally of 120,300 bales.

With domestic cotton output at a four-year low and local demand for fiber running strong since December, traders remain hopeful that the USDA will cut inventory estimates for the No. 1 exporter of the commodity when the 2013/14 crop year draws to a close on July 31.

Cotton was one of the better-performing commodities of 2013, gaining 13 percent mostly on a November-December rally driven by a pickup in U.S. sales that cut into inventories. The market has started out strongly again this year, rising 6 percent year-to-date. (Reporting by Barani Krishnan; Editing by Jonathan Oatis)