Cotton futures ended slightly higher Wednesday on thin trade buying, as the market waits for the federal 2006/07 US crop production forecast due later this week, market sources said. The New York Board of Trade's December cotton contract edged 0.13 cent higher to close at 56.66 cents per lb, after trading from 56.40 to 56.95 cents.
March added 0.10 to 59.45 cents, and the rest, with the exception of October, which fell 0.05 cent, rose 0.01 to 0.15 cent. "Everybody is waiting for the report on Friday before they initiate new positions or liquidate positions, so it's a wait-and-see game right now," said one broker, adding that the boost was due to thin trade buying.
"In the last six sessions since last Wednesday, the market's range has been defined by last Friday's sharp sell-off to 55.75 (cents, basis December) and Monday's rally to 57.75 cents," said Mike Stevens of Swiss Financial Services in Mandeville, Louisiana.
"It shouldn't be surprising that prices stick real close to the mid-point, at 56.75 cents," Stevens added. "Nobody is buying or selling anything they can't get out of quickly." On Monday, fund buying boosted the benchmark contract to highs last seen in mid-June, but it settled lower Tuesday on thin trade sales.
Traders said they expect the market to stay in a tight band ahead of the US Department of Agriculture's monthly supply/demand report due out Friday.
The agency's August US production figures are expected to be much lower than last month's forecast, which counted US cotton output for 2006/07 at 20.5 million (480-lb) bales. Last year's output hit a record 23.89 million, but the US crop has continued to endure withering drought across the cotton belt.
A Reuters poll of industry dealers ahead of the monthly report showed an average of 18.933 million bales in US cotton production.
Broker Flanagan Trading Corp sees resistance in the December contract at 56.70 and 57.20 cents, with support at 56.25 and 55.50 cents. Floor sources said the final estimated trading volume reached 4,000 lots, down from Tuesday's 6,143 lots. Open interest in the cotton market rose 458 lots to 163,582 lots as of August 8.
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