Cotton futures vaulted to a firm finish Tuesday on all-around buying sparked by a surge in other commodity markets following a holiday weekend, brokers said. The cotton market was shut Monday for a holiday. ICE Futures' open-outcry March cotton contract rose 0.62 cent to end at 69.44 cents per lb, dealing from 69.40 to 69.95 cents. May cotton added 1.40 to 71.80 cents.
The new-crop December cotton contract increased 1.07 cents to 77.56 cents. The March electronic cotton contract was up 0.68 cent to 69.50 cents at 3:19 pm EST (2019 GMT), moving from 68.80 to 70.20 cents. Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia, said fiber contracts were inspired by a surge in the grains, crude and metals complex.
"Cotton's got nowhere to go but up," she said. Analysts said cotton's next move will depend on what happens in other commodity markets. But the market will also take its cue from presentations at the annual outlook meeting of the US Agriculture Department later in the week. Analysts said the trade will be looking at any presentations on crop prospects in the upcoming 2008/09 marketing year (August/July), especially on prospective plantings and production in the United States.
Switch activity was also a feature in trading as investors get out of positions in the spot contract before first notice for deliveries next week. Open interest in March fell 19,866 lots to 33,825 lots as of February 15. With the amount liquidated today, brokers said total open interest by Tuesday's close should be around 20,000 to 25,000 lots.
Brokerage Flanagan Trading Corp sees resistance in the March open-outcry cotton contract at 70 and 70.90 cents, with support at 69.30 and 68.60 cents. Open-outcry volume Friday was at 10,746 lots and screen business was at 75,199 lots. Open interest in the cotton market dropped 10,711 lots to 264,956 lots as of February 15, exchange data showed.
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