US nearby cotton futures rode a persistent drumbeat of speculative fund buying to finish Wednesday at a 9-month high and the market could edge higher in the days ahead, analysts said. The New York Board of Trade's key May contract rose 0.15 cent to end at 53.78 cents a lb, in a band from 53 to 54.20 cents. July increased 0.40 cent to 55.22 cents.
Except for one contract, deferred months ended down 0.05 to 0.75 cent.
"Each time the market begins to attempt a set back, buyers are waiting in the wings. Until this pattern breaks, it is difficult to imagine speculative cotton bulls getting in much trouble," said Mike Stevens of SFS Futures in Mandeville, Louisiana.
Early losses in cotton were swiftly erased when speculative funds came charging back into futures and when May raced past the Tuesday high of 53.70 cents, the funds piled into the market, dealers said.
The sustained rally in the Reuters-CRB commodity index added to the buoyant mood in cotton.
Fundamentally, cotton's rally is well supported by widespread expectations that consumption will outstrip output in the 2005/06 season. Plantings are also expected to fall while demand is seen staying robust given an expanding global economy.
The Food and Agricultural Policy Research Institute said US 2005 cotton sowings will likely hit 13.71 million acres, down slightly from the USDA's projection of 13.8 million acres this year.
Looking forward to the US Department of Agriculture's weekly export sales report on Thursday, cotton brokers said they feel US cotton sales will range from 150,000 to 200,000 running bales (RBs, 500-lbs each), from 205,900 RBs in last week's report.
US cotton shipments of previously booked orders are seen running from 300,000 to 400,000 RBs, versus 385,800 RBs in the last report.
Brokers Flanagan Trading Corp said resistance in the May contract was at 54.50 and 55.25 cents, with support at 54 and 53.65 cents.
Open interest in the cotton market went up 1,335 contracts to 124,394 lots as of March 15.
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