NYBOT cotton futures settled at a fresh four-week high Thursday on a steady fusillade of fund buying and the momentum in the market will likely nudge it higher in the coming days, dealers said.
Key December cotton rose 0.31 cent to settle at 48.68 cents a lb while ranging from 47.15 to 48.73 cents. It was the best close for cotton on a spot basis since trading around 49 cents in mid-July.
March added 0.52 cent to 49.90 cents. Distant months increased 0.10 cent to 0.58 cent.
"It was all fund buying," said Jobe Moss, an analyst for brokers and merchants MCM Inc. in Lubbock, Texas. "I wouldn't be surprised to see 49 or 50 (cents) in December."
Futures tumbled at the start on speculative profit-taking, but that move soon ran out of steam shortly after the start of business and the funds came right back in, dealers said.
Analysts said the large short position of commodity funds meant that any fall in cotton would have to be short-lived and will be seen as an opportunity to buy the market.
"Cotton has been beaten down so much and the funds are so short we really needed to come back," a dealer said.
But some analysts said the cotton market is still looking at large crops in the US and elsewhere so the focus will turn to demand for cotton to absorb greater output.
On that front, the US Department of Agriculture's weekly export sales report showed combined US net upland cotton sales at 246,300 running bales (RBs, 500-lbs each) for the week ending August 12, against trade belief it would range from 175,000 to 225,000 RBs.
Moss said the sales were running at a good level even though the 2004/05 marketing year was just getting under way.
Brokers Flanagan Trading Corp said resistance in the December contract was at 49.20 and 50 cents, with support at 48.30 and 47.90 cents.
Floor dealers said estimated final volume amounted to 9,000 contracts versus Wednesday's tally of 13,779 lots.
Open interest slid 3,021 lots to 74,698 lots as of August 18.
Comments
Comments are closed.