New York cotton ends limit up

Cotton futures settled on Wednesday up their daily limit on investor buying on bullish technicals and analysts said a more stable economic environment should nudge fibre higher this week. Oil prices were firmer and gold prices steady after a two-day rally as the steadier tone of outside commodity markets gave some support to cotton.
The key December cotton contract on ICE Futures US rose the 4-cent limit or nearly 4 percent to finish at $1.0785 per lb, with the session low at $1.0288. Total volume traded hit over 18,100 lots, almost a third above the 30-day norm, Reuters data said. Independent Louisiana-based analyst Mike Stevens said the December contract appears poised to challenge topside resistance around $1.0888.
He said in a report the finish over $1.0552 tends to confirm the current rally in cotton futures finished slightly lower Tuesday on sales by small investors in the thinnest trading volume since last summer. On Tuesday, the key December cotton contract on ICE Futures US shed 0.19 cent to settle at $1.0385 per lb, trading from $1.0236 to $1.0424. Total turnover was a little over 6,500 lots, Thomson Reuters preliminary data showed. That would be half as much as Monday and the lowest since June 25, 2010, ICE Futures US data showed.
Traders said the market also received a boost from talk of rains in Pakistan, sparking memories of last year when crippling floods in that country helped stoke the rally to record highs in the market. "Some traders are likely taking a 'shoot first and ask questions later' attitude" towards the situation in Pakistan, Stevens explained in a report.
The level of investor interest stayed near its recent lows. Open interest was at 141,177 lots as of August 16, only a few hundred lots above the 140,442 lots on August 11 which was then the lowest level in over two weeks, ICE Futures US data showed. Total volume traded Tuesday hit 7,113 lots, the lowest level of business since May 23, ICE data showed. On Thursday, the trade will be looking at the US Agriculture Department's weekly export sales report to gauge the pace of US cotton sales.