Cotton futures closed higher on Thursday on a steady drumbeat of speculative buying, and the strong tone of the market may lead to an extension of the advance before the weekend, brokers said. The New York Board of Trade's December cotton contract climbed 0.68 cent to close at 50.60 cents per lb, in a band from 50 to 50.90 cents.
March gained 0.65 to 53.64 cents. The rest increased 0.55 to 0.65 cent. Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana, said the December contract had been floundering between 49.50 and 50 cents for most of the last three weeks.
"We're getting ready to expand that range a little bit," he said, adding the close above the key technical target of 50.50 cents in December could nudge cotton higher in the days ahead. Sharon Johnson, cotton expert for First Capitol Group in Atlanta, had said a sustained finish above 50.50 cents may open the door to an eventual challenge of 52 and 53 cents.
Fundamentally, cotton has clearly digested bearish estimates raising world cotton output and reducing consumption, especially from leading consumer China. But once the December contract held a double bottom 48.07 and 48.08 cents and a low a few months back of 47.80, the drive above 50 cents meant the advance had some legs beneath it, dealers said.
The market also received some positive backdrop from the US Agriculture Department's weekly export sales report which showed total US cotton sales at 225,800 running bales (RBs, 500-lbs each), within trade beliefs it would range from 200,000 to 300,000 RBs, and last week's 162,000 RBs.
US cotton shipments of previously booked orders amounted to 137,200 RBs, from 113,100 RBs last week and trade belief it would be from 100,000 to 150,000 RBs.
Broker Flanagan Trading Corp sees resistance in the December contract at 51.20 and 52 cents, with support at 50.50 and 50 cents. Floor sources said final volume hit around 23,000 lots, from the previous tally of 12,540 lots. Open interest in the cotton market rose 1,314 lots to 185,084 lots as of October 25.
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