Cotton futures ended on Tuesday at a 4-month top as trade/mill and fund buying swiftly erased losses from a commodity-wide selling spree triggered by fears of a weak global economic recovery, analysts said. ICE Futures US benchmark December cotton contract rose 1.13 cents to finish at 85.22 cents per lb, trading from 82.46 to 85.36 cents.
It was the highest settlement close for cotton's second position contract since late April. Volume traded in the December contract hit a hefty 13,269 lots at 2:46 pm EDT (1846 GMT). Total volume traded at 2:47 pm was at 17,983 lots, around 19.67 percent over the 30-day average at 15,027 lots, preliminary Thomson Reuters data showed.
Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana, said fibre contracts tumbled early when a wave of selling from outside markets spilled into the commodity complex. But after dipping below the key support level at 82.50 cents, the December contract ran into robust trade/mill buying and when investment funds saw the market hold, they bought back cotton futures.
"We had come down with the outside markets," said Stevens. "We (then) held and turned right back up again." Traders were uncertain whether the market's momentum would lift cotton futures higher the rest of the week. "The close over 85 (cents) should give us a pop early on," one said. Many market players are going to be attending the mid-year meeting of industry group National Cotton Council of America in Memphis, the centre of cotton trading in the country.
Brokers Flanagan Trading Corp sees resistance in the December contract at 85.55 and 86.40 cents, with support pegged at 84.55 and 83.60 cents. Volume traded Monday hit 10,293 lots, compared with the previous tally of 8,863 lots, ICE Futures US data showed. Total open interest in the market stood at 212,656 lots as of August 23, against the previous 211,161 lots, Thomson Reuters data showed.
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