NYBOT cotton futures closed with slight gains on Friday as the market staged a modest rebound after sharp losses yesterday sparked by the federal government projecting the second-biggest cotton harvest on record, dealers said.
Key December cotton settled up 0.45 cent at 44.30 cents a lb after trading between 43.55 and 44.40 cents. March added 0.47 to 45.57 cents and distant months gained 0.10 to 0.53 cent.
Mike Stevens of Swiss Financial Services in Mandeville, Louisiana, said large crops in the US and elsewhere meant market fundamentals are bearish, but the market appears to have absorbed the figures issued on Thursday by the US Department of Agricultures monthly supply/demand report.
USDA forecast US cotton production in 2004/05 hitting 20.18 million (480-lb) bales, near the all-time record of 20.3 million in 2001/02 and well above trade expectations it would hit an average of 18.878 million bales.
World cotton output in 2004/05 was seen at 106.59 million bales, nearly six million bales above world consumption of 100.66 million, the USDA said.
"The ability of the futures market to hold in the face of the USDA report indicated the market had previously discounted the very bearish increase in crop size and world carryover," said the weekly marketing outlook of economist O.A. Cleveland.
He added: "The markets inability to fall below 42 cents in the aftermath of the report is the first significant evidence that the 30-month downtrend will hold."
Stevens said ample trade buying provided support for cotton futures and most players were evaluating the supply/demand outlook to see if a further push south in cotton prices is warranted or not.
Analysts shrugged off any impact hurricane Charley, which is now threatening citrus farms in central Florida, will cause any damage to cotton plantations in Georgia, North and South Carolina, and Virginia.
"Even if some cotton gets hurt, the simple fact of the matter is that we have a lot of cotton this year," one said.
Brokers Flanagan Trading Corp said support in the December contract would be at 44 and then 43 cents. Resistance is said to lurk at 44.60 and 45 cents.
Floor dealers said estimated final volume amounted to 4,000 contracts versus Thursday's tally of 13,078 lots. Open interest rose 1,614 lots to 79,665 lots as of August 12.