New York cotton settles firm as trade awaits leads

Cotton futures closed higher Tuesday on speculative buying as the market struggled to find direction since most players were looking to the grains pit for leads on their next move after a holiday break, analysts said. The cotton market was shut Monday for the Martin Luther King Jr. Day holiday.
The New York Board of Trade's March cotton contract added 0.22 cent to end at 54.92 cents per lb, ranging from 54.30 to 55.09 cents. May cotton rose 0.23 to 55.79 cents. The rest went up from 0.10 to 0.30 cent. "Drifting is a good word (today)," said Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia. "(Cotton got) lost in the shuffle."
Analysts said cotton futures were supported by rising belief that surging grains prices, especially corn futures, would eventually rob cotton of acreage in the 2007 spring planting season.
While the numbers from the latest US Agriculture Department monthly supply/demand report were seen as bearish, traders said the numbers referred to old-crop figures and prices for new-crop cotton contracts are higher than old-crop contracts.
Futures drifted within a few points of unchanged for most of the session until a late flurry of speculative buying hoisted the market into positive ground, dealers said.
"Cotton will follow Chicago's lead for the moment with the ongoing (corn) rally providing an opportunity for commercials to sell into the rally even as funds re-examine their recent selling," said a report by Sharon Johnson, cotton expert for First Capitol Group. "Corn's electrifying performance could not come at a worst time for cotton as many producers have ample time to realign their plantings based on current price levels," she said.
The first indication of plantings would come in the National Cotton Council's annual meeting next month. A better gauge would be when the USDA releases its annual planting intentions report at the end of March. Brokers Flanagan Trading Corp sees resistance in the March contract at 55.05 and 55.55 cents, with support at 54.50 and 54.10 cents.
Floor dealers said final volume stood at 19,500 to 20,000 lots, from the prior tally of 33,925 contracts. Open interest in the cotton market climbed 4,642 lots to 174,677 contracts as of January 12.