Cotton futures settled firmer on Friday on late investor buying as it bucked weaker grains prices due to underlying bullish fundamentals in the market, brokers said. The key December cotton contract rose 0.13 cent to finish at 73.24 cents per lb, dealing from 72.50 to 74.16 cents. Volume in the December contract stood at 7,485 lots at 2:49 pm EDT (1849 GMT).
Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia, said if grain prices were not as weak as they are, the cotton market may have performed better and not spent most of the day in negative territory.
Analysts said cotton seems to receive considerable commercial support every time the December contract gets close to 72 cents. On a fundamental level, analysts said market participants are monitoring the development of the US, China, India and Pakistan cotton crops through the summer. The first detailed look at the cotton harvest in the US and elsewhere would be in the August monthly supply/demand report from the US Agriculture Department.
JOHNSON SAID IN A REPORT: "While other commodities may lose additional spec participation with the inevitable downward pressure on prices, cotton's stability with open interest is indicative that those long and short may be here to stay."
"I know it may be a popular opinion to become overly bearish with cotton but a significant low is typically made during the month of August so users should be watchful for pricing opportunities as well as those looking for a spot to buy with limited risk into this fall," Johnson concluded. For now, forecaster DTN Meteorlogix said Texas, the top cotton growing state in the country, will get steady showers through the weekend and into Tuesday.
Brokers Flanagan Trading Corp sees support in the December contract at 72.50 and 71.65 cents, with resistance at 73.60 and 74.40 cents. Volume traded Thursday hit 14,590 lots, exchange data showed. Open interest in the cotton market fell 3,448 lots to 219,147 lots as of July 17, exchange data showed.
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