New York cotton futures finished mixed Tuesday in mostly switch business as players got out of positions in spot December before the delivery period commences next week, players said. December cotton surged 1.68 cents to end at 46.59 cents a lb, dealing from 45.20 to 47.40 cents with active March up 0.07 at 42.12 cents after trading from 43.33 to a new lifetime low of 41.80 cents. The rest sank 0.38 to 1.20 cents.
Keith Brown, president of commodity trading firm Keith Brown and Co in Moultrie, Georgia, said there is apparently a squeeze in the December contract stemming from a lack of certificated cotton stocks.
Brown said the squeeze in December could be seen from investors forced to pay up and cover positions in the contract.
Dealers said a major merchant is believed to be the big player with a long position in December and standing for delivery in the contract.
Sharon Johnson, cotton expert for Frank Schneider and Co Inc in Atlanta, said once the squeeze in December has "waned, prices will fall in line with those overseas."
Eventually, dealers said cotton market players will have to wrestle with record US and world cotton output and a sharp rise in stocks in the 2004/05 season.
Johnson said that "once the December contract is put to bed, we should know rather quickly if another substantial drop is (in) front of us or if price performance of the last four months has been a precursor to that of the next four to six months."
Open interest in December dropped 4,426 lots to 19,687 lots as of November 15 while interest in March rose 4,077 lots to 48,942 lots.
"We'll probably see more rollovers and then stabilise coming out of first notice next week," a broker said.
Brokers Flanagan Trading Corp pegged resistance in the December cotton contract at 47.30 cents, with support at 46.50 and 46.10 cents.
Floor dealers said estimated final volume was 35,000 lots, up from Monday's count of 30,151 lots. Open interest rose 390 lots to 91,270 lots as of November 15.
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