Cotton futures finished slightly higher Friday as switch trade was again the main feature of business in lethargic dealings, brokers said. New York Board of Trade's December cotton contract edged up 0.03 cent to end at 49.21 cents per lb, trading from 48.76 to 49.40 cents. March rose 0.08 to 53.35 cents and the rest gained 0.10 to 0.35 cent.
"It's like watching a caterpillar come across the terrace," said Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia, when asked about activity in the cotton pit. "It's just rolling. That is the big feature (of the market)," he added.
Rolling is the process through which investors move positions out of the spot contract before it goes into delivery. As a result, open interest in the December contract fell 1,945 to 97,112 lots as of November 2 while interest in March went up 1,943 to 59,917 lots. The December contract goes into first notice on November 22, smack in front of the US Thanksgiving holiday. The contract expires on December 6. Traders said that fundamentally, cotton must contend with bumper supplies while consumption in the world, especially from leading user China, has been down the past few weeks. With that in mind, prices seem poised to head lower.
"The overriding trend continues to suggest a bit more to the downside. Yet, whatever the market low, if it is yet in front of us, most likely we will see it this month," said influential analyst O.A. Cleveland. Analysts said the market will now look toward the US Agriculture Department's monthly supply/demand report to provide some clues on its next move.
Brokers Flanagan Trading Corp sees resistance in December delivery at 49.30 and 50 cents, with support at 48.75 and 48.05 cents. Floor sources said final volume hit around 17,000 lots, off from Thursday's tally of 19,973 lots. Open interest rose 767 lots to 185,009 contracts as of November 2.
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