New York cotton settles higher

Cotton prices bounced Wednesday as spillover from outside markets added to buying based on technical chart cues. Nearby cotton for October delivery settled 0.92 cent, or 1 percent, higher at 73.93 cents a pound on ICE Futures US.
Cotton prices have skidded 3 percent since June 30, when the US Department of Agriculture estimated that high cotton prices had lifted the amount of domestic acres planted to the commodity. Rebounding world textile demand sparked a recovery in use of the fibre. Favourable weather is also aiding the development of the 18.30 million bales of cotton thought to be growing in US fields, USDA data show. Pressure from a bumper crop, as well as uncertainty about upcoming demand, are keeping cotton within a narrow trading range.
After such sharp losses, technical charts indicated that speculative and fund traders, like banks and hedge funds, should buy back previously sold positions to exit bearish exposure in the market. "We are in a technical condition that could allow this market to run up to 75.50 area," said Keith Brown of Keith Brown & Co in Moultrie, Ga.
Lack of selling Tuesday also allowed prices to rise, Brown said. Selling related to producer sales kicks in at 75 cents, 75.50 and each 50-cent increment thereafter, he said. The next downside price objective for the cotton market bears is to push and close December futures below solid technical support at 72.50 cents, a technical analyst said. Below that lies chart support at 72.00 cents, the analyst said. Late losses in equities pulled cotton prices lower as Federal Reserve Chairman discussed a "somewhat weaker outlook" for the US economy.
"They're thinking that the recovery is getting weaker and that consumer spending will be soft," said Tom Mikulski, senior market analyst at Lind-Waldock in Chicago. Volume was estimated 16,627 lots. In options, approximately 1,956 calls and 826 puts traded on the floor, according to exchange data.
ICE daily cotton stocks decreased Tuesday to total 87,130, with 7,555 decertification orders, according to exchange data. ICE cotton open interest-the number of active positions left at the end of the session-decreased by 920 positions Wednesday to total 157,763, according to the exchange.- Dow Jones Commodities News via Comtex.