New York cotton settles at three-month high

Cotton futures settled on Wednesday at a three-month top on investment fund buying sparked in part by concern about rains affecting the Chinese cotton crop and a fresh rally in the grains pit, brokers said. ICE Futures open-outcry December cotton contract soared 1.23 cents to finish at 64.21 cents per lb, trading from 63.15 to 64.25 cents.
On a spot basis, it was the highest close for cotton since the middle of July. March cotton added 1.25 to 67.95 cents. The rest increased from 0.83 cent to 1.26 cents. The ICE December electronic cotton contract added 1.22 cents to 64.20 cents at 2:43 pm EDT (1843 GMT), moving from 62.50 to 64.28 cents. "Technically, it looks better," said Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana.
He said the close over 64 cents, basis December, broke the recent trading range from 62.15 to 63.96 cents seen the last six sessions and should mean the market will move higher in the days ahead. But Stevens said the question is whether the market will do so given the proximity to Friday's release of the monthly supply/demand report from the US Agriculture Department.
Analysts said the catalyst for the surge was provided by a strong rally in grains prices, particularly soybeans, and talk that recent rains in China may have harmed cotton quality in the world's leading fibre consumer. Cotton contracts surged from the opening bell and touched off automatic buy orders to sustain its advance, dealers said.
Analysts said the USDA report on Friday should show a small increase in the US cotton crop to just over 18 million (480-lb) bales from last month's 17.81 million.
"Better yields and, in a few instances, higher area, explain the larger forecast crop especially in the Delta and the Southwest," said a report by First Capital Group cotton expert Sharon Johnson.
The focus though will be on the figures for China and what kind of demand is taking shape in the world despite fears of a global economic slowdown. Brokers Flanagan Trading Corp sees resistance in the open-outcry December cotton contract at 64.85 and 65.60 cents, with support at 64.05 and 63.25 cents.
Open-outcry cotton volume Tuesday was 3,675 lots, while screen business reached 9,066 lots. Open interest in the cotton market fell 1,557 lots to 232,745 lots as of October 9.