Cotton futures finished on Thursday at a six-month top on investor and fund buying and the market could move up further due to strong chart-based signals, brokers said. The most-active July cotton contract climbed 1.32 cents to close at 52.11 cents per lb, moving from 50.52 to 52.47 cents. On a spot basis, it was the highest close for cotton on the second position charts since October 23.
Volume traded in the July contract was at 10,134 lots at 2:44 pm EDT (1844 GMT). Spot May cotton rose 1.71 cents to end at 51 cents, trading from 48.79 to 52 cents. Frank Weathersby, an analyst for brokers Affinity Trading in Fort Walton Beach, Florida, said that it looks like hedge fund accounts are piling into cotton.
"We're looking for it to continue to move up," he said, adding the rally in soybean futures has also provided support for fibre contracts. Fundamentally, supportive factors for cotton include news that China is preparing a plan to buy cotton for its reserves. There is also an estimate by a US Agriculture Department attache that Chinese cotton imports in 2009/10 are forecast at 3.0 million tonnes, up 85 percent from the estimated 1.6 million tonnes in 2008/09.
Attache data are not official USDA data. In other news, the US Agriculture Department's weekly export sales report showed total US cotton sales at 313,700 running bales (RBs, 500-lbs each), against sales last week of 418,100 RBs. The trade had expected sales from 250,000 to 350,000 RBs.
US cotton export shipments stood at 239,200 RBs, from 236,300 RBs last week and trade belief it would run between 200,000 and 250,000 RBs. Analysts peg resistance in the July cotton contract at 53 cents, with support at 52 and 51 cents. Open interest in the cotton market was at 120,486 lots as of April 22, from the prior tally of 121,776 lots, it said. Total volume traded Wednesday reached 10,369 contracts, from the previous tally of 20,552 lots, exchange data showed.
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