Cotton futures closed higher Tuesday on modest buying by small speculators and switch trade as investors moved positions out of the spot contract before going into deliveries next week, brokers said. ICE Futures open-outcry December cotton rose 0.02 cent to settle at 63.14 cents per lb, trading 63.05 to 63.45 cents.
The now active March contract gained 0.23 cent to 67.86 cents. One contract aside, the rest added 0.10 to 0.20 cent. The ICE March electronic cotton contract was up 0.27 cent to 67.90 cents at 2:55 pm EST (1955 GMT), dealing from 67.64 to 68.03 cents. Frank Weathersby, an analyst for brokers Affinity Trading in Fort Walton Beach, Florida, said most of the running in the market came from switch trade.
Open interest in the open-outcry December cotton contract sank 11,247 lots to 70,355 lots as of November 12 while interest in the now most-active March contract gained 4,747 to 110,674 contracts. The December contract will go into delivery after the close of business on Wednesday, November 21. The cotton market will then be closed on Thursday and Friday, November 22 and 23, for the long US Thanksgiving holidays.
Analysts said the market was also keeping tabs on the pace of the US cotton harvest, especially after abundant moisture led to bigger crops in places like Texas, the top cotton growing state in the country.
"For now, I think the March contract will run from 67 to 69 cents and see if this trend where the amount of US cotton exports is gradually reduced in government (crop) reports plays itself out," a dealer said.
While that may be bearish for cotton, the market could draw support from expectations that US cotton sowings in 2008 may be lower than the 18-year low of 11.01 million acres planted in 2007.
Broker Flanagan Trading Corp said it saw resistance in the open-outcry December cotton contract at 63.25 and 64.05 cents, with support at 62.70 and 62 cents. Open-outcry cotton volume on Monday was at 17,166 lots and screen trade at 40,095 lots. Open interest in the market dropped 5,795 lots to 239,863 lots as of November 12.
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