Cotton futures finished near a month high Friday on follow-through investment fund buying and brokers said the strong tone to fibre contracts would spill over into next week. The key December cotton contract settled up 0.64 cent at 74.50 cents per lb after dealing from 73.45 to 74.80 cents.
Based on the second position charts, it was the highest close for cotton in about a month. Volume traded in the December contract stood at 7,950 lots at 2:37 pm EDT (1837 GMT). Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia, said automatic buy orders kicked in, especially once the December contract raced past 74.20 cents. "75.70 (cents) is the high we're gunning for," said Brown. "We close over that and off we go."
After easing to its lows for the day, investment funds ran the market up and hit buy stops along the way, dealers said. Fundamentally, analysts feel cotton is looking more bullish over the longer-term because ending stocks are seen being run down due to lower supplies in 2008/09.
The market took note of news from the Ag Market network that cotton prices could surge to a 14-year top next spring as high grain prices keep the pressure on world cotton plantings, the chief executive of leading cotton merchant Allenberg Cotton Co said Friday. Allenberg CEO Joe Nicosia said cotton may rally 30 to 40 cents to as high as $1.15 a lb, a high last seen in the mid-1990s.
He said this would lead to a sharp reduction in world cotton ending stocks going into the 2009/10 marketing year (August/July). Brokers Flanagan Trading Corp sees resistance in the December contract at 75.25 and 76.15 cents, with support at 74.40 and 73.60 cents. Volume traded Thursday hit 8,603 lots, exchange data showed. Open interest rose 1,035 lots to 218,764 lots as of July 24, exchange data showed.
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