New York cotton settles higher

Cotton futures finished higher on Monday on trade and investor buying as the market staged a modest rebound and direction will come from a government crop report due out tomorrow, analysts said. The key March cotton contract increased 1.80 cents to close at 74.24 cents per lb, trading from 72.55 cents to 74.49 cents.
Volume traded in the March contract hit 9,374 lots at 3:06 pm EST (2006 GMT). Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana, said every attempt to break down the market ran into support from trade and suspected consumer buying. He said that automatic pre-placed computer buy orders in cotton kicked in when the March contract hit 73.40 cents.
Traders said market participants will now wait for release of the US Agriculture Department's monthly supply/demand report on Tuesday to see which direction fibre contracts will move in the coming sessions. Most of the focus by the trade would be on figures from other major producers of cotton, such as China and India.
A report by Sharon Johnson, cotton expert for First Capitol Group in Atlanta, said output in No 1 cotton consumer China and India may "fall over time." "This month's report may have little, if any, impact on price, but that could change into February, March," she said.
A report by John Flanagan of brokers Flanagan Trading Corp in North Carolina said the figures on the world side of the ledger could provide a slight boost for prices. "There, we expect to see world use of cotton increased, again, to 115 million (480-lb) bales," said Flanagan. "It is also likely that the USDA will reduce India's production by 1 million bales or more."
In its last supply report, world 2009/10 cotton consumption was pegged by the USDA at 114.51 million bales. India's output was cut to 23.8 million bales from 24.25 million. Brokers Flanagan Trading Corp sees resistance in the March contract was at 75.50 and 77 cents, with support at 74.05 and 72.85 cents.
Total volume traded Friday hit 13,723 lots, against the previous 14,881 lots, according to data from ICE Futures US Open interest in the cotton market stood at 181,992 lots as of January 8, from the prior count of 183,474 lots, the exchange said.