Cotton futures settled on Friday at a fresh 3-month top on investor buying tied in part to a tight deliverable supply situation as fibre contracts bucked all-around weakness in outside markets, brokers said. ICE Futures US benchmark December cotton contract added 0.17 cent to finish at 80.23 cents per lb.
It was the highest settlement close for the second position cotton contract since May 5, according to Thomson Reuters data. December traded from 79.45 to 80.71 cents. It was an inside day since the range was within Thursday's 79.01 to 81.78 band.
The spot October cotton contract added 0.20 cent to finish at 84.40 cents. October enjoys a 4.17 cents premium over December, up from the 4.14 cents premium in the previous session. Volume traded in the December contract reached 7,570 lots at 2:51 pm EDT (1851 GMT). He added though cotton will likely "chop around" since most of the trade will be looking ahead to the release of the key US Agriculture Department supply/demand report on Thursday, the first for he 2010/11 marketing year.
Sharon Johnson, cotton expert at First Capitol Group in Atlanta, said cotton futures ran into a steady drumbeat of trade and producer selling above 80 cents. A supportive factor for the market is tight deliverable supplies. US certificated cotton stocks stood at 30,440 (480-lb) bales as of August 5, down from the previous 39,563 bales and the lowest since 2004.
Cotton held up despite the poor performance of global stocks and the limit-down fall of wheat futures, which had hit a 2-year peak in the previous session due to a drought in Russia and a halt in its grain exports.
Brokers Flanagan Trading Corp sees resistance in the December contract at 80.70 and 81.65 cents, with support pegged at 79.80 and 78.75 cents. Volume traded Thursday hit 28,508 lots, compared with the previous tally of 11,475 lots, ICE Futures US data showed. Open interest in the No 2 cotton market was at 185,927 lots as of August 5, versus the previous 178,947 lots, the exchange said.
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