Cotton futures sprang to a firm close Tuesday on speculative short-covering and trade buying as the market staged a strong rebound from recent losses, analysts said. The New York Board of Trade's key May contract shot up 1.26 cents to end at 51.38 cents a lb, dealing from 50.25 and 51.70 cents. On Monday, the contract closed at 50.12 cents in the lowest close for cotton since March 7 when it ended at 49.53 cents.
July jumped 1.50 to 52.92 cents. Distant months increased from 1.15 to 1.30 cents.
Mike Stevens of SFS Futures in Mandeville, Louisiana, said cotton came "roaring back" after bouncing hard from the Monday low of 49.10 cents, basis May.
"It (cotton) reminds you that we're in a bull market," he said, adding fibre contracts have "firm fundamental underpinnings" going into the 2005/06 marketing year (August/July).
Most analysts feel cotton should move north due to strong demand and lower plantings in the upcoming 2005/06 season from countries like the United States.
Futures popped higher from the opening bell with most of the running taken up by speculative buying. Dealers said the strong rebound from the key support level of 49.10 cents in the May contract inspired speculators to pile in.
Stevens said the market faltered in the area of 51.65/70 cents, basis May, and players may be looking for an area where cotton could hover for the meantime until more market-moving news filters into the trading pit.
The next bit of news that should provide direction for cotton will be released on March 31 in the US Department of Agriculture's annual planting intentions data.
Brokers Flanagan Trading Corp said support in the May contract was at 50.80 and 50.20 cents, with resistance at 51.70 and 52.50 cents.
Floor dealers pegged estimated volume at 12,500 lots, versus the previous 25,441 lots. Open interest in the cotton market fell 3,313 contracts to 118,615 lots as of March 21.
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