New York cotton futures surge

Cotton futures ended Thursday near a 6-month high on a steady barrage of speculative buying and rallies in other commodity markets like orange juice and coffee, analysts said. The New York Board of Trade's key May contract increased 0.65 cent to close at 52.65 cents a lb, dealing between 51.65 and 53.20 cents. It was the best close for the contract since finishing at 53.05 cents on September 13, 2004.
July went up 0.71 to 53.92 cents. Distant months sprang up 0.53 cent to 1.80 cents.
"It's principally a spec rally," Sharon Johnson, cotton expert for Frank Schneider and Co Inc in Atlanta, Georgia, said. But she believes the cotton rally is way overdone and the market resembles a ship in the North Atlantic ocean about to run into trouble because it "doesn't see the iceberg coming".
Futures popped higher from the opening bell as speculators raced past automatic buy orders at 52.50 and 53 cents, dealers said. Late profit-taking trimmed the gains in the market.
Johnson said the robust rally in the Reuters-CRB Commodities Index, which is approaching its lifetime high of 337.60 points further encouraged cotton market bulls.
The market ignored for the most part a pair of reports released by the US Department of Agriculture.
In its monthly supply/demand report, USDA raised its estimate for world cotton production in 2004/05 to 117.71 million (480-lb) bales from 116.72 million last month. World cotton ending stocks were increased to 47.55 million bales from 46.74 million bales in the last report.
The USDA weekly export sales data said US cotton sales hit 205,900 RBs, sharply up on trade expectations it would range from 75,000 to 150,000 RBs. US cotton shipments of previously booked orders amounted to 385,800 RBs, against trade belief of 300,000 to 400,000 RBs in shipments.
Brokers Flanagan Trading Corp said resistance in the May contract should be at 53.20 and 54 cents, with support at 52.50 and 51.70 cents.
Floor traders said final volume hit about 17,500 contracts, from the previous 16,751 lots. Open interest in the cotton market went up 962 contracts to 117,037 lots as of March 9.