Cotton futures closed higher on Monday on follow-through investor buying as the market extended its rebound after dropping last week to a 14-month low, analysts said. The key December cotton contract on ICE Futures US rose 0.84 cent to close at 97.94 cents per lb, dealing from 96.96 to 98.39 cents. It was an inside day since the range was within Friday's 96.47 to 98.80 cents band.
Last Thursday, the contract fell by almost 3 percent to end at 96.86 cents in the lowest settlement for the spot contract since September 2010. It was also the first time in almost four weeks the December contract broke a trading band ranging from 98 cents to $1.04.
Total volume traded Monday hit over 12,000 lots, some 10 percent under the 30-day norm, preliminary Thomson Reuters data showed. Independent cotton analyst Mike Stevens said the inability of the market to stay above 98 cents meant cotton will stay near new support around 93 cents.
"It's dead in the water. It totally ignored the outside markets," Stevens of Mandeville, Louisiana, said. He was alluding to cotton's muted reaction to global stocks which hit a seven-week high on optimism European leaders were closer to resolving their debt crisis. Oil prices and the grains complex likewise posted strong gains in Monday's session as part of a broad commodities advance.
Open interest in cotton, usually taken as an indicator of investor exposure in cotton, stood at 157,290 lots as of October 21, from 156,328 lots on October 20, the exchange said. Open interest is now at its highest level since early June. Total volume traded Friday in the cotton market reached 15,069 lots, against the prior tally of 22,529 lots, ICE futures US data showed.
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