NYBOT cotton futures settled Monday limit up on all-around buying after tropical storm Gaston struck cotton farms in the US and as a new hurricane loomed in the Atlantic, dealers said.
Key December cotton climbed the 3.00 cent limit to close at 51.44 cents a lb, with the session low at 48.25 cents. March gained the same to 52.95 cents. Distant months increased 3.00 cents.
"It's more weather concern than anything," said Frank Weathersby of brokers Affinity Trading in Fort Walton Beach, Florida.
Gaston swept ashore in South Carolina on Sunday, dumping over eight inches of rain in three hours in some areas, transforming some streets into small lakes.
Farm land was already saturated by rain from Hurricane Charley and remnants of tropical storm Bonnie, which hit the area earlier in August.
The rains were particularly unwelcome since they fell on open cotton plants, which could harm cotton yields and quality, analysts said.
Lurking in the Atlantic is Hurricane Frances, which could sweep ashore by Friday. Frances added to the uncertainty felt by the market since it would hit before a holiday weekend.
The cotton market is shut next Monday for US Labour Day. Trading resumes on Tuesday, September 7.
Fund and options-related buying catapulted cotton higher from the opening bell, brokers said.
Fundamentally, the market would still need to contend with large crops in China and the United States. The two are the world's biggest producers and the Asian nation is the world's top consumer of cotton.
"We don't have a weather premium on this market yet. That's what we are trying to do now," a dealer said.
Technicians said they believe resistance in the December contract was at 52 and 52.50 cents. Support would be at 51.35 and 50.70 cents.
Floor dealers said estimated final volume stood at 5,700 contracts, down from Friday's tally of 8,270 lots. Open interest fell 433 lots to 70,541 lots as of August 27.
Comments
Comments are closed.