New York cotton near session highs

NYBOT cotton futures settled near session highs Tuesday on speculative and options-related buying, with some analysts saying the market should ride technical buying higher although fundamentals remain cloudy, dealers said.
Key December cotton settled up 1.19 cents at 45.95 cents a lb after trading from 44.32 to 46 cents. March gained 0.90 to 47 cents and distant month's rose 0.15 to 1.16 cents.
"Its bearish exhaustion to the downside," said Keith Brown, president of commodity trading firm Keith Brown and Co in Moultrie, Georgia.
He said a "trickle of short-covering has turned into a stream" as late buying from speculators and option ring players powered nearby cotton contracts to higher territory.
Early bouts of profit-taking nudged cotton down to its lows, but the market turned when speculators and commercial players began chasing fibre contracts to higher ground, brokers said.
Fundamentally, cotton has been weighed down by near ideal growing weather in the US and elsewhere. But some analysts feel the move south has been overdone and expectations of bumper cotton crops has likely been factored into the cotton market.
"The markets moved in perfection," Brown said, alluding to the US cotton crop. He added that late-season hurricanes could still hammer wide swathes of the US cotton belt and this will be driven home by Hurricane Alex which is set to deal a glancing blow to the Outer Banks off North Carolina.
In fact, in the last two years, late-season storms drenched the US Delta states of Louisiana and Mississippi just before the cotton was to be harvested.
Traders said December could spark further short-covering if it closes above 46 and then 47 cents in the coming sessions.
"If December can go over 46 and 47 we may have (set) a low in cotton," one said.
Analysts said the market will be looking toward the last export sales report from USDA due Thursday, and then the critical USDA's monthly supply/demand report to be released on August 12.
Brokers Flanagan Trading Corp pegged support in the December contract at 45.50 and 44.20 cents with resistance at 46 and 46.65 cents.
Floor dealers said estimated final volume amounted to 7,200 contracts, up from Monday's tally of 5,615 lots. Open interest fell 289 lots to 79,519 lots as of August 2.