New York cotton settles higher

Cotton futures finished higher on Monday on speculative buying as recovery in other markets hit by last week's credit squeeze buoyed fibre contracts although the overall mood remained one of caution, brokers said. New York Board of Trade's key open-outcry December cotton contract settled up 1.18 cents at 58.68 cents per lb after trading 58.28 to 59.25 cents.
Last Thursday, the contract ended at a 10-week low of 57.18 cents in its worst performance since early June.March cotton rose 1.25 to 62.20 cents. The rest gained from 1.28 to 1.40 cents. The IntercontinentalExchange NYBOT electronic cotton market showed December cotton up 1.25 cents at 58.75 cents by 2:31 pm EDT (1831 GMT), moving from 57.50 to 59.25 cents.
Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia, said the recent recovery in world equity markets helped sentiment in cotton, but the speculators were still gripped by caution. "We want to see if the stock markets are for real," he said, adding that fundamentals in the market should give fibre contracts a boost in the days ahead. Brown said that once market players see that cotton's recovery is on a firmer footing, it will encourage investors to "commit big money." "Cotton is now severely oversold and sharply below a fair market value given the world demand for cotton and it should be able to regain the upper 60-cent range quickly," said a daily commentary by brokers Flanagan Trading Corp.
For now, the trade will wait for the US Agriculture Department's weekly crop progress report going out at 4:00 pm (2000 GMT) to gauge the condition of the crop.
The market also expects the USDA's weekly export sales report on Thursday to show robust US cotton sales. Flanagan Trading sees support in the December cotton contract at 58.20 and 57.50 cents, with resistance at 59.20 and 59.80 cents. Open-outcry volume stood on Friday at 14,314 lots while screen business reached 18,842 lots. Open interest was at 200,221 lots as of August 17, down 4,868 lots from the previous session.