March 28, 2012 / 6:51 PM / 8 years ago

NY cotton ends near 2-mo high ahead of USDA data

* Tight supplies, steady demand boost cotton
    * Market at loftiest settlement since early February

    NEW YORK, March 28 (Reuters) - Cotton futures finished
Wednesday near a two-month high on speculative fund buying as
tight nearby supplies and steady demand for U.S. cotton stoked
an advance that should continue in nearby contracts, analysts
    The benchmark May contract on ICE Futures U.S. rose
1.44 cents, or 1.5 percent, to end at 94.03 cents per lb,
dealing from 91.90 to 94.08 cents. It was the loftiest close on
the spot cotton contract since Feb. 7.	
    Volume traded amounted to around 28,300 lots, about 15
percent over the 30-day norm, Thomson Reuters data showed.	
    "Fundamentally, we've got reason to be upbeat," said Sharon
Johnson, senior cotton analyst at commodities brokerage Penson
Futures in Atlanta.	
    A prime catalyst for the move was tight supplies in the
old-crop May and July cotton contracts <0#CT:>.	
    While world 2011/12 cotton ending stocks were pegged by the
U.S. government at a hefty 62.32 million (480-lb) bales, Johnson
and other traders said the market is discounting the bearish
tint of the figure.	
    Johnson said up to 40 percent of the stocks are in the
"hands of China and India," which meant that cotton is only for
their mills and "not accessible" for the world market.	
    The tight supply situation is thus reflected only in May and
July, with the new-crop December cotton contract adding
0.21 cent to close at 90.69 cents.	
    The trade is now awaiting release of the U.S. Agriculture
Department's weekly export sales on Thursday to gauge fiber
demand in the market. 	
    On Friday, the USDA will release its keenly awaited annual
potential plantings report.	
    A Thomson Reuters survey of industry participants showed
they expect U.S. 2012 cotton sowings to be down about 13 percent
from last year, or about 12.74 million to 12.76 million acres,
because of higher prices in grains such as soybeans.
    In early February, the industry group National Cotton
Council had pegged U.S. 2012 cotton sowings at 13.63 million
acres (5.5 million hectares), down 7.4 percent from 2011 cotton
plantings of 14.72 million acres. 	
    The main reason for the switch, traders say, is the high
price of grains such as soybeans <0#S:> compared to cotton.	
    Open interest, an indicator of investor exposure, fell for
the second day in a row after rising for 12 straight sessions.
It stood at 189,215 lots as of March 27.	
    On Friday, open interest in the cotton market was at 190,909
lots, the highest since Feb. 9, ICE Futures U.S. data showed.	
 (Reporting by Rene Pastor; Editing by Bob Burgdorfer)
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