US cotton futures snapped a losing streak on Tuesday to end up for the first time in five days on trade buying and short-covering, dealers said.
"We were all very pleasantly surprised," Sharon Johnson, senior cotton analyst at First Capitol Group in Atlanta, said. "The buying came right on key support and held through."
The New York Board of Trade's December cotton contract surged 2.4 percent, or 1.28 cents, to end at 55.36 cents per lb. Traders said strong buying emerged as December touched an intra-day low of 54.11 cents but did not challenge support at 54 cents. The contract then rose to 55.85 cents, staying just under resistance at 56 cents. But immediate direction was uncertain, with players divided on the status of the US cotton crop in the current season.
Fundamentally, dealers said, focus remained on weather over the US cotton belt, which has raised questions on the type of demand that may emerge for cotton as marketing year 2006/07 (August/July) gets under way.
Until a week ago, it appeared that a drought from late July through early August would result in a US cotton crop that would be around 19 million bales on the high side and 18.5 million bales on the low end. But rains in recent days have put that forecast in a different light, dealers said.
On the trade front, NYBOT said deliverable cotton stocks for its No 2 cotton futures contract rose slightly to 518,639 (480-lb) bales as of August 21, from 517,272 bales on August 18. March cotton closed up 1.27 cents at 58.81 cents per lb. Other contracts ended up 1.05 to 1.30 cents.
Comments
Comments are closed.