New York cotton futures higher

Cotton futures settled fractionally firmer on Thursday in thin dealings as most players were away from their trading desks ahead of the New Year break, brokers said. The cotton market will be shut Friday and trading will resume on Sunday night. The key March cotton contract rose 0.17 cent to close at 75.60 cents per lb, trading from 75.37 to 75.95 cents. Volume traded in the March contract hit 3,635 lots at 2:50 pm EST (1950 GMT).
On the year, cotton prices have risen 54.22 percent over their close in 2008 as investors began pouring into fibre contracts in the second half of this year because they believe the commodity is undervalued. "Next week will carry more weight because everybody's back to work," said Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia. Traders said the pace of business was very slow with many players opting to go for an early New Year holiday. The market did not get a boost from the weekly US Agriculture Department weekly export sales report.
USDA said total US cotton sales reached 380,000 running bales (RBs, 500-lbs each), from 227,000 RBs in last week's data. US upland cotton sales were at a marketing year (August/July) high at 349,600 RBs. US cotton export shipments stood at 166,400 RBs, versus exports last week at 139,700 RBs. Fundamentally, values are seen deriving support from the tight supply situation in China, the world's top consumer of cotton, analysts said.
The pointed to news that China's 2009/10 cotton crop would fall over 11 percent to 6.7 million tonnes, which is equivalent to about 29 to 30 million (480-lb) bales. The US Agriculture Department's monthly supply report pegged China's 2009/10 cotton output at 31.50 million bales.
The annual rebalancing of investment fund portfolios beginning in January could also boost cotton prices if fund managers decided to increase their weightings for cotton, a commodity they have long believed is undervalued.
Brokers Flanagan Trading Corp sees resistance in the March cotton contract at 75.50 and 77 cents, with support at 74.05 and 72.85 cents. Total volume traded Wednesday hit 7,529 lots, against the previous 4,797 lots, according to data from ICE Futures US Open interest in the cotton market stood at 187,081 lots as of December 30, from the prior count of 186,395 lots, the exchange said.