Cotton futures finished with moderate gains on Thursday with activity remaining light as players waited for US Department of Agriculture weekly export sales data which was delayed by the holiday this week.
"We're slow for a couple of reasons. One is the holiday week and two, the export numbers come out tomorrow so people are kind of laying low," said Keith Brown of Keith Brown and Co in Moultrie, Georgia. The cotton market was shut Wednesday for the US Independence Day holiday.
The New York Board of Trade's key December cotton contract closed 0.41 cent higher at 63.89 cents per lb and set a higher range from 63.70 to 63.90 cents. The rest settled from 0.20 to 0.40 cent higher, except July cotton which ended even.
IntercontinentalExchange's NYBOT electronic cotton market's December contract was quoted with 0.47 cent gains at 63.95 cents a lb by 2:43 pm EDT (1843 GMT). USDA will release its weekly export sales report a day later than usual because of the US holiday on Wednesday. Weekly cotton sales are due at 0830 am EDT (1230 GMT) Friday.
Analysts said cotton players will watch Friday's export sales report for the demand equation. After that, the trade will turn its attention to the monthly USDA production report to see what kind of impact the plantings data will have on US cotton output for 2007/08.
A US government plantings report released last week came in below expectations, pushing prices higher. "I also still think there is some bullish jubilation about that (low) acreage number still floating around. People are doing a little bit of a double take about that," Brown added.
While cotton bears argue that plenty of the fibre is still available, he said, the market accounted for a supply surplus when prices fell to a contract low at 51.60 cents in May.
"We've already dialled that in, so we're just marking time right now," Brown said. The market jumped sharply following the release of last Friday's US Agriculture Department annual plantings data which pegged US cotton sowings in 2007 at an 18-year low of 11.1 million acres.
Based on expected harvested cotton acreage and a yield of 820 lbs/acre last year, the US cotton crop may reach only 16.8 million (480-lb) bales, down sharply from the June USDA production report estimate of 18.8 million bales. In 2006/07, the US harvested 21.59 million bales of cotton.
Brokers Flanagan Trading Corp said in a daily report they see resistance in the December contract at 64.10 cents, then 65.18 cents, with support at 63.50 and 62.75 cents. Open interest in the cotton market rose by 765 lots to 208,627 lots as of July 3, NYBOT exchange data showed.
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