New York cotton closes higher

NYBOT cotton futures settled higher Wednesday on speculative and options-related buying, with rains in the key growing area of Texas buoying bullish sentiment in fibre, analysts said.
Key December cotton surged 1.24 cents to finish at 48.47 cents a lb, near the top of its 47.10 to 48.50 band. March jumped 1.13 to 50.28 cents and the rest rose 0.20 to 1.48 cents.
Sharon Johnson, cotton expert for Frank Schneider and Co Inc in Atlanta, said small speculators found themselves overly short in cotton and the buying from the options ring "set the stage for a rally."
Weather Channel said in a report on its Web site www.weather.com that abundant moisture from the Gulf of Mexico will unload heavy showers in Texas, the top cotton producer in the country, along with Louisiana, another important cotton area.
The rains in Texas are particularly unwelcome since cotton bolls are open and moisture could dent both yields and quality. The showers are also expected to delay harvesting in water-logged fields.
That prospect has provided bullish sentiment for cotton and the level of buying has not run into any level of sales until December surged past 48 cents, traders said.
Looking toward the US Department of Agriculture's weekly export sales report, cotton brokers said US net upland cotton sales should reach from 140,000 to 200,000 running bales (RBs, 500-lbs each), versus last week's total sales of 226,200 RBs.
They said US cotton shipments of previously booked orders should hit 50,000 to 120,000 RBs, from 61,300 RBs last week.
Further out, the trade will be waiting for USDA's monthly supply/demand report on October 12 containing a fresh update on estimates for cotton production and consumption in the 2004/05 marketing year (August/July).
Brokers Flanagan Trading Corp pegged support in December delivery at 48.30 and 47.75 cents, with resistance at 49 and 49.50 cents.
Floor dealers pegged estimated final volume at 5,500 lots, down from Tuesday's tally of 10,724 lots. Open interest fell 712 lots to 71,859 lots as of October 5.