Cotton futures closed higher on Wednesday as demand optimism from China and technical strength boosted prices, traders said. The key July cotton contract climbed 1.08 cents to end at 83.28 cents per lb, trading from 81.75 to 84.13 cents. Volume traded in the July contract stood at 15,293 lots at 2:30 pm EDT (1830 GMT).
New-crop December cotton futures ended 0.2 cent higher at 78.11 cents, ranging from 77.66 to 78.24 cents. Traders in China said that rising demand from the world's most populous country would boost prices. "Soaring prices in China to new contract highs in spite of import licenses, inclement weather and pests in China's crop and of course, possible sales from the certified stocks were all possible reasons for the move," said Mike Stevens, cotton expert at Louisiana-based Swiss Financial Services.
Stevens, however, said that the July contract should face stiff technical resistance at 84 cents - the level where recent rallies failed on charts. China will remain in 2010 the key driver in commodities markets' strong rebound, with rubber one of the star sectors led by resilient growth in the Chinese car industry, a French commodity analyst said on Tuesday. On Monday, traders said China will soon issue additional import quotas for cotton to cover a deficit, with domestic prices rising and futures prices at record highs.
Going forward, analysts the market must contend with how the certificated cotton stocks on ICE Futures US would be disposed in the coming weeks. Volume traded Tuesday reached 15,339 lots, against the previous tally of 13,768 lots, according to ICE Futures US. Open interest in the cotton market was at 184,262 lots as of May 18, up from the prior 181,049 lots, the exchange said.
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