Cotton futures ended higher Friday on trade and investor buying as the market seems to have shrugged off for now a bearish government crop report, brokers said. The key December cotton contract rose 1.00 cent to close at 74.99 cents per lb, trading from 73.61 to 75.38 cents. On the week, the contract was down 0.71 percent from last Friday's close of 75.53 cents.
Volume traded in the December contract stood at 9,128 lots at 2:37 pm EDT (1837 GMT). Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana, said December may eventually push higher by ending just short of the contract's 200-day moving average at 75.09 cents. The market quickly set aside the bearish impact of the US Agriculture Department's monthly supply/demand report which pegged US 2010-11 cotton production at 18.3 million (480-lb) bales, up from last month's 16.7 million bales and sharply higher than trade belief of 17.9 million bales.
Stevens and other analysts said the market had already partially factored in a higher US figure. Attempts to deflate fibre contracts also ran into solid consumer and merchant buying. "We know (cotton) export demand has been phenomenal," Stevens said. This seemed to be borne out by the weekly export sales data from the USDA which showed US cotton sales at 401,500 running bales (RBs, 500 lbs each), against sales last week at 408,700 RBs.
Brokers Flanagan Trading Corp put support in December at 74.25 and 73.30 cents, with resistance at 75.10 and 76.15 cents. Volume traded Thursday reached 14,598 lots, from the prior tally of 14,195 lots, ICE Futures US data showed. Open interest in the No 2 cotton market was at 158,164 lots as of July 8, compared to the prior 159,179 lots, the exchange said.
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