Cotton futures finished higher on Monday on investor short-covering as the market rebounded from a 12-week low, but most analysts feel the next move of fibre contracts remained uncertain at this time. The key March cotton contract increased 2.54 cents to conclude at 69.16 cents per lb, moving from 67.10 to 69.54 cents.
On Friday, the contract settled at 66.62 cents in the lowest finish for cotton since the middle of November. Volume traded in the March contract hit 17,253 lots at 2:40 pm EST (1940 GMT). Since trading as high as 76.77 cents on January 4, the benchmark cotton contract hit a session low of 66.55 cents on Friday.
That represented a fall of 13.31 percent in value between January 4 and February 5. "We're up in agreement with the outside markets," said Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia. The weaker dollar also buoyed fibre contracts as most players looked toward release on Tuesday of the monthly supply/demand report from the US Agriculture Department.
Johnson said the cotton market will take a look at the numbers from the USDA and then take their cue, as they have done so for several weeks, from the performance of the grains, metals, crude and equity markets. Analysts contacted by Reuters believe the USDA data will focus on changes in US cotton exports and possible reductions in crop estimates for countries like India, for instance.
Brokers Flanagan Trading Corp sees resistance in the March contract at 69.50 cents, with support at 68.60 and 67.80 cents. Total volume traded Friday hit 50,279 lots, against the previous 20,610 lots, according to data from ICE Futures US Open interest in the cotton market stood at 164,173 lots as of February 5, from the prior count of 168,874 lots, the exchange said.
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