Cotton futures settled fractionally higher on Thursday on late investor buying as the market's downward spiral seemed to have slowed and futures consolidated, brokers said. The key December cotton contract gained 0.12 cent to close at 73.47 cents per lb, dealing from 73.06 to 74.29 cents. On Wednesday, the contract ended near a five-month low at 73.35 cents.
Volume traded in the December contract stood at 7,130 lots at 2:31 pm EDT (1831 GMT). Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia, said cotton was trying to "shake off bearish technical conditions" and consolidate after the recent downturn.
Analysts said the ability of December to hold 73 cents could encourage some players to go back into cotton. They said the market should have gotten a boost from a weaker US dollar, which would encourage consumers to buy cotton, and strong export sales data from the US Agriculture Department.
USDA's weekly export sales data showed total US cotton sales at 354,200 running bales (RBs, 500-lbs each) versus 401,500 RBs in last week's report and slightly above trade expectations that it would run from 250,000 to 350,000 RBs. Fundamentally, the market is looking at a large US cotton crop in 2010/11. The trade is awaiting the release next month of the USDA supply report for the first detailed look at market conditions in the 2010/11 marketing year (August/July).
Brokers Flanagan Trading Corp put support in December delivery at 73.30 and 72.25 cents, with resistance at 74.25 and 75.10 cents. Volume traded Wednesday amounted to 12,670 lots, off from the prior tally of 13,228 lots, ICE Futures US data showed. Open interest in the No 2 cotton market was at 153,880 lots as of July 14, compared to the prior 153,514 lots, the exchange said.
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