New York cotton futures end at three-week highs

Cotton futures settled at a three-week high on Tuesday on speculative buying as the market ignored a commodity sell-off, and follow-through buying is expected to boost values in the days ahead, analysts said.
The New York Board of Trade's December cotton contract jumped 1.41 cents to end at 54.17 cents per lb, moving from 52.25 to 54.50 cents. It was the highest close for the contract since June 28 when it ended at 54.20 cents.
March gained 1.35 to 57.11 cents. The rest increased from 1.25 to 1.55 cents. Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana, said cotton contracts defied the sell-off which hit other commodities as players focused on hitting certain price levels.
"The market ignored fundamentals going down and it went up on technicals," he said, noting that the key December contract took off once speculative buying powered it over chart points at 53.50 and 53.70 cents. Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia, said the close was "very positive all around, with closes above trendlines" in the market.
Fundamentally, the market should see higher prices longer term since drought has battered the US cotton crop. The US Agriculture Department's weekly crop progress report on Monday showed that 31 percent of the US cotton crop was in poor to very poor condition as of July 16. At the same time last year 12 percent of the crop was rated poor to very poor.
A total of 49 percent of the cotton crop in Texas, the top growing state in the country, is in poor to very poor shape while only 20 percent is in good to excellent condition, according to the USDA data.
A daily commentary by Alan Feild of brokers iamhedged.com in Memphis, Tennessee, said the cotton crop rating is comparable to the drought-stricken harvest in 1998/99 and there is every likelihood it "will get even worse" given the relentless dry spell gripping the US cotton belt. Brokers Flanagan Trading Corp sees resistance in the December contract at 54.75 and 55.50 cents, with support at 53.55 and 53 cents. Floor dealers said estimated final volume reached 14,000 lots, versus the previous 5,776 lots. Open interest in the cotton market rose 19 lots to 161,522 lots as of July 17.