New York cotton futures shade higher

Cotton futures finished with slight gains Wednesday in another session featuring the transfer of positions out of the spot month before deliveries begin next week, brokers said.
The New York Board of Trade's May cotton contract edged up 0.05 cent to end at 52.55 cents a lb, in a band from 52.25 to 52.75 cents. July gained the same to 53.95 cents. The rest were flat to up 0.10 cent.
"It's been a lot of spreading," said Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia.
She said cotton futures appear to be building a base around its current level and the pit continued to see fairly good buying at the lows.
On spread trade, open interest in the May contract slumped 6,646 contracts to 21,089 lots as of April 18 while interest in July climbed 5,238 to 84,987 contracts.
Analysts said cotton futures may be gearing up for a sustained advance given the exceptionally dry conditions in key states like Texas and the rest of the south-western US.
A daily commentary by Alan Feild of brokers iamhedged.com in Memphis, Tennessee, said most of the over 600,000 (480-lb) bales in certificated cotton stocks is at carry which means there will only be modest deliveries, a severe dry spell and large short positions by some investors in the market.
"You have the key ingredients for an explosion in prices," said Feild.
Looking forward to the weekly export sales report from the US Department of Agriculture, cotton brokers said they expect total US cotton sales to range from 150,000 to 250,000 running bales (RBs, 500-lbs each), from sales last week at 157,800 RBs.
US cotton shipments are seen ranging from 450,000 to 550,000 RBs, from the marketing year peak of 541,100 RBs last week. Some brokers caution that while shipments of 500,000 RBs are possible, there have been only a few times when cotton export shipments reached that high.
Brokers Flanagan Trading Corp sees resistance in the May cotton contract at 52.75 and 53.30 cents, with support at 52.10 and 51.50 cents.
Floor dealers said final trading volume was estimated at 28,000 lots, down from Tuesday's count of 36,750 lots. Open interest rose 330 lots to 140,710 contracts as of April 18.