New York cotton marginally higher

Cotton futures closed marginally higher Wednesday as trade buying and speculative short covering enabled the market to erase the losses from an early downturn caused by fund liquidation, brokers said. ICE Futures open-outcry December cotton contract rose 0.19 cent to close at 63.43 cents a lb, moving from 62.15 to 63.77 cents.
March cotton gained 0.28 cent to end at 66.91 cents. The rest ended from 0.85 lower to 0.28 higher. The ICE December electronic cotton contract added 0.20 cent to 63.44 cents at 2:58 pm EDT (1858 GMT), moving from 62.15 to 63.77 cents. "I think we could continue recovering," said Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia.
He said fund sales drove the key December contract down to a critical area of support around 62.10/15 cents, but the market bounced from there to end in positive territory. Analysts said they expect cotton prices to consolidate around these levels until release of next week's monthly supply/demand report by the US Agriculture Department.
They also do not expect the market to sell off further given the bullish outlook for cotton prices due to an expected fall in US cotton sowings in 2008. American farmers are tipped to sow less cotton and plant more wheat and corn among others after strong rallies in both grains this year.
US cotton plantings in 2007 were at an 18-year low of 11.01 million acres, the US Agriculture Department said. On another front, cotton brokers said the recent rally in cotton will likely lead to low sales when the USDA hands out its weekly export sales report on Thursday.
The brokers expect total US cotton sales to range from 80,000 to 150,000 running bales (RBs, 500-lbs each), from sales last week of 140,300 RBs. They said US cotton shipments of previously booked orders should reach 200,000 to 250,000 RBs, against shipments in last week's USDA data of 265,600 RBs. Broker Flanagan Trading Corp sees resistance in the open-outcry December cotton contract at 64.05 and 64.85 cents, with support at 63.25 and 62.70 cents.
Open-outcry cotton volume Tuesday was 8,977 lots, while screen business reached 21,466 lots. Open interest in the cotton market fell 1,074 lots to 232,612 lots as of October 1.