Cotton futures settled with small gains Tuesday on late short-covering as the market largely shrugged off a government plantings report, brokers said. The new-crop December cotton contract gained 0.51 cent to settle at 57.48 cents per lb, moving from 55.89 to 58.94 cents. Volume traded in the December contract was at 7,959 lots at 2:41 pm EDT (1841 GMT).
The July cotton contract rose 0.44 cent to end at 53.30 cents. Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia, said an initial wave of technical buying was capped and the market stumbled when corn futures sank because of a very bearish corn acreage forecast from the US Agriculture Department's annual plantings report. She said automatic sell-orders further deflated cotton along with poor US economic confidence data.
The market then staged a late recovery to near unchanged levels. Johnson said the USDA estimate of US 2009 cotton sowings at a slightly higher-than-expected 9.054 million acres "wasn't much of a surprise." Analysts said the market will next look for leads from the USDA's weekly export sales report and next week's USDA monthly supply/demand data. "You had a technical pop in the morning and that faded just as quickly in the afternoon.
I don't see us going too far until we get the July supply report out of the way and get to August when a detailed survey of crops becomes available," a dealer said. That USDA report will contain the rate of abandonment of cotton farms in the United States and would help market players in getting a better handle on the size of the US cotton crop.
Brokers Flanagan Trading Corp sees support in the December contract at 56.35 and 55.40 cents, with resistance at 58.65 and 59.70 cents. Total volume traded Monday reached 3,430 lots, versus the previous tally of 8,255 contracts, exchange data showed. Open interest was at 107,952 lots as of June 29, from the previous count of 107,167 contracts, ICE Futures US said.
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