Cotton futures closed slightly easier on Monday on mild profit-taking after surging to a 3-1/2 month high last week, but analysts feel the market's rally is not done and a further advance is in the cards. ICE Futures US benchmark December cotton contract slipped 0.16 cent to finish at 84.02 cents per lb.
On Friday, the contract ended at 84.18 cents in the highest close for the second position cotton contract since April 28, according to Thomson Reuters data. December traded from 83.75 to 84.79 cents. It was an inside day since the range was within Friday's 83.23 to 85.71 cents band.
Volume traded in the December contract hit 6,804 lots at 2:33 pm EDT (1833 GMT). Total volume traded at 2:34 pm was at 10,067 lots, down 52.31 percent versus the 30-day average of 15,333 lots, preliminary Thomson Reuters data showed. "Today, we're just kind of treading water," said Jobe Moss, an analyst for brokers and merchants MCM Inc in Lubbock, Texas, adding fibre contract saw a "little profit-taking."
The market had rallied strongly since mid-July, with open interest rising to its highest level since September 2008. Moss said given the shallowness of the pullback, cotton seems on track to move higher. Analysts said the market may eventually challenge the March 2008 high over 92 cents.
"I don't think we're done going up," he said. The trade is still fretting over the extent of damage in Pakistan to its cotton crop after severe floods struck the country. Brokers Flanagan Trading Corp sees resistance in the December contract at 84.55 and 85.55 cents, with support pegged at 83.60 and 82.75 cents. Volume traded Friday hit 25,701 lots, compared with the previous tally of 30,317 lots, ICE Futures US data showed. Open interest in the No 2 cotton market was at 204,495 lots as of August 13, versus the previous 198,989 lots, the exchange said.
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