Cotton futures finished higher on Friday on follow-through investment fund buying, and the momentum from its advance should spill over into next week, brokers said. The key May cotton contract rose 1.21 cents to end at 44.08 cents per lb, trading from 42.95 to 44.34 cents. July added 1.18 cents to conclude at 44.93 cents.
Volume traded in the May contract was at 8,327 lots at 2:43 pm EDT (1843 GMT). "I would expect to see more follow-through, but (that will depend) on what the markets do next week," said Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia. She added that leads may also be forthcoming from remarks by Federal Reserve chairman Ben Bernanke on the outlook for the economy.
Johnson and other dealers said that even though the dollar recovered somewhat on Friday after its huge fall the previous session, the units overall weakness is helping fibre contracts. Aside from investor buying, there was also some sign of mill purchases in the market, traders said. Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana, said the finish by the May contract over 43.75 cents meant some investment funds would probably reverse their short positions.
"In that case, first upside targets should be 44.75-45.90 (cents)," he said, adding a close in May "above 45 (cents) would project to 47 (cents)." Johnson said that once early interest fades, the market will turn its attention to a key government report due out at the end of the month. That would be the US Agriculture Departments annual potential plantings data due out on March 31.
Brokers Flanagan Trading Corp sees support in the May contract at 43.60 and 42.75 cents, with resistance at 44.75 cents. Volume traded Thursday reached 14,774 contracts, from the previous tally of 15,021 lots, exchange data showed. Open interest in the cotton market was at 133,390 lots as of March 19, from the prior tally of 130,490 lots, it said.
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