Cotton extended its rebound by banking on speculative short-covering to end firmer Wednesday and follow-through buying could push the market higher this week, brokers said.
The New York Board of Trade's December cotton contract shot up 1.10 cents to end at 52.88 cents a lb, in the top half of its 51.60 to 52.90 cents band. March sprang up 1.12 to 54.22 cents and the rest rose 0.40 to 1.03 cents.
"I think it's just spec covering in the market," said Keith Brown, president of commodity trading firm Keith Brown and Co in Moultrie, Georgia. "We may try to test that gap between 53 and 54 cents (basis the December contract)."
Fundamentally, most players were keeping en eye on the development of the US cotton crop, which is nearing harvest. Conditions in China, the world's largest producer and consumer of the fibre, were also occupying the attention of the trade.
Futures slipped marginally at the start to its lowest point for the day, but speculators quickly reversed field to push fibre contracts to its highs before the December contract stalled just short of 53 cents, the dealers said.
Analysts said the market will be waiting for Friday's weekly export sales report from the US Department of Agriculture.
More importantly, the trade will be waiting for release of the September monthly supply/demand report by the USDA to provide cotton with further direction on its next move.
"Once we get those two reports out of the way, we'll switch to harvest pressure and this could cap any further advance in cotton," a dealer said.
Separately, the market will also wait for news on talks to resolve a textile dispute between the United States and China, especially after the European Union backed a clothing deal with Beijing.
Brokers Flanagan Trading Corp sees resistance in the December contract at 53.25 and 53.80 cents, with support pegged at 52.50 and 51.85 cents.
Floor dealers said estimated volume hit 25,000 lots, up from Tuesday's tally of 20,630 contracts. Open interest fell 804 lots to 107,098 lots as of September 6.