ICE cotton futures move up as index fund roll continues –
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ICE cotton futures move up as index fund roll continues

2015-04-15 08:50:04 Business Recorder

Cotton futures rose on Monday as index funds continued to roll long positions forward ahead of the May contract's first notice day, and traders eyed reports of rains across US growing regions with the potential to delay plantings. The most-active July cotton contract rose 0.06 cent, or 0.1 percent, to settle at 65.46 cents a lb. Front-month May cotton gained 0.07 cent, or 0.1 percent, to settle at 65.13 cents a lb. 

Both contracts had sold off in the prior two sessions, after the US government raised its supply forecast for the 2014/15 season, which ends in July, and traders took profits after several days of strong gains.

Monday's modest gains came amid the index funds' roll period, during which investors close out contracts in the front-month May contract ahead of its first notice day and open July positions.

"There was still some cleaning up to do there," said Chris Kramedjian, a risk management consultant at INTL FCStone in Nashville, Tennessee, noting that spreading between the front-month and second-month contracts accounted for the elevated volumes in both.

July cotton maintained its premium to the May contract, marking the second straight day of a forward curve structure known as contango, in which the second-month trades at a premium to the front month, after several days of inverted trade.

Traders also eyed rains in much of the US growing regions, with Maryland-based MDA weather services forecasting that showers would build across the Delta, Southeast, Coastal Blend and West Texas growing regions.

This could delay plantings for the 2015/16 crop, prompting traders to look closely at the US Department of Agriculture's crop progress reports, Kramedjian said.