Cotton futures settled on Friday at their highest level since early 2004 on sustained all-around buying as lower US cotton sowings next year stoked a rally in the market, brokers said. The ICE Futures open-outcry March cotton contract rose 0.11 cent to finish at 67.89 cents per lb, trading from 67.55 to 68.08 cents.
Based on the spot weekly charts, it was the loftiest finish for cotton since around February 2004. May added 0.19 to 69.38 cents. The rest were flat to up 0.35 cent. The ICE March electronic cotton contract was down 0.07 cent at 67.71 cents at 2:53 pm EST (1953 GMT), with volume traded in the contract at 8,149 lots. "The specs just got on a buying binge," said Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia.
She said the speculative and fund accounts were apparently focusing on the bullish factor of lower US 2008 cotton plantings as a prime reason for increasing their long positions in cotton. Open interest in cotton has steadily risen this month, increasing 3,033 lots to 229,201 lots as of December 27. Analysts and other industry players have said US cotton sowings in 2008 are expected to fall sharply because of strong rallies that hoisted grains like corn and wheat among others to multi-year highs.
US 2007 cotton plantings stood at 10.847 million acres. Informa Economics, a Memphis, Tennessee-based analytic firm, has forecast 2008 US cotton plantings at 9.185 million acres. That would be the lowest planted to cotton since 1983, according to data from the US Agriculture Department. The market did not derive too much inspiration from the USDA's weekly export sales report.
USDA said total US cotton sales stood at 147,400 (500-lb) running bales, down from 164,400 RBs in last week's report and trade expectations it would range from 150,000 to 250,000 RBs. Broker Flanagan Trading Corp sees resistance in the March open-outcry cotton contract at 68.60 and 69.30 cents, with support at 67.40 and 66.70 cents.
Open-outcry cotton volume Thursday was 6,653 lots and screen trade was 22,657 lots. Open interest in the market rose 3,033 lots to 229,201 lots as of December 27, according to exchange data.
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