Cotton futures settled higher Wednesday as the market's ability to hold an area of support encouraged late short-covering in fibre contracts, brokers said. The key March cotton contract rose 0.29 cent to close at 49.67 cents per lb, trading between 49.02 and 50.10 cents. Volume traded in the March contract was at 6,928 lots at 2:51 pm EST (1951 GMT).
The May contract added 0.26 cent to end at 50.58 cents. Jobe Moss, an analyst for brokers and merchants MCM Inc in Lubbock, Texas, said fiber contracts were content to drift in subdued dealings until the late pop hoisted futures. The spot March contract was also beginning to see the start of switch activity as investors moved their positions out of the spot contract and into the back months.
Traders said the March contract's ability to hold support at the area of 49 cents inspired some players to cover their positions late. Looking toward the weekly US Agriculture Department's export sales report, brokers said total US cotton sales should range from 50,000 to 150,000 running bales (RBs, 500-lbs each), versus sales last week of 117,100 RBs.
The brokers said the Lunar New Year festivities which shut down top cotton consumer China and a rally which took cotton prices to 52 cents, basis the spot month, drove most buyers to the sidelines. After the sales data, the trade will turn its attention to the US Agriculture Department's monthly supply/demand report next Tuesday and then the annual plantings survey data from the industry group National Cotton Council.
Brokers Flanagan Trading Corp said it sees resistance in the March cotton contract at 50.50 and 51.60 cents, with support at 49.60 and 48.95 cents. Volume traded Tuesday reached 13,884 lots, exchange data showed. Open interest in the cotton market was at 128,412 lots as of February 3, from 128,463 lots in the previous session, it said.
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