Cotton futures edged up to a firm close Friday on investor buying as the market consolidated, and brokers said the next move depends on outside markets. The key December cotton contract added 0.49 cent to close at 73.96 cents per lb, trading between 73.13 and 74.25 cents. It was an inside day as the contract stayed within Thursday's 73.06 to 74.29 band. On the week, December was down 1.37 percent from its Friday close at 74.99 cents.
Volume traded in the December contract stood at 8,465 lots at 2:38 pm EDT (1838 GMT). "It's like a little yo-yo," Sharon Johnson, cotton expert at First Capitol Group in Atlanta, Georgia, said in describing the recent gyrations of the market. "There's no consistency (in cotton futures) because of the outside market influences," she said. Fibre contracts will derive their leads from the performance of world markets and the fragile state of global economic recovery, with a particular emphasis on top cotton consumer China.
Technically, the ability of December to hold 73 cents could encourage some players to engage in some short-covering in cotton along with some mill fixation purchases by players locking up supplies for the upcoming 2010/11 season, the analysts said. The uncertainty should persist until August and possibly September when market participants should get a better handle on supplies in top producers like China, the US and India.
"We should also get a better idea what the economy looks like then," one said. In the meantime, the trade will be looking toward release of the US Agriculture Department's weekly crop progress report on Monday to gauge the condition of the US cotton crop.
Brokers Flanagan Trading Corp sees support in December at 73.30 and 72.25 cents, with resistance at 74.25 and 75.10 cents. Volume traded Thursday reached 9,033 lots, from the prior tally of 12,670 lots, ICE Futures US data showed. Open interest in the No 2 cotton market was at 153,636 lots as of July 15, compared to the prior 153,880 lots, the exchange said.
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