Cotton futures settled higher Friday on combined trade and speculative buying in a modest recovery from the recent downturn, with market players saying fiber contracts will look for leads next week.
The New York Board of Trade's key December cotton contract rose 1.28 cents to end at 54.49 cents a lb, dealing between 53.07 to 54.60 cents. It was an inside day since the range was within Thursday's 53.05 to 54.90 cents band.
On Thursday, the contract settled at 53.21 cents in the lowest close for cotton on a spot basis since trading near 52 cents in early October. March increased 1.17 cents to 56.42 cents. Back months gained from 1.00 to 1.20 cents.
"We seem to be finding support temporarily," said Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia.
She said the market would need to see if the weakness seen this week will be extended in the sessions ahead.
"The larger question is whether it (the December contract) will hold in the 52-53 cents level or drop lower, toward 49-51 cents. The answer in large part depends on whether the large funds are willing to risk additional heat should 52 (cents) be violated," Johnson said in a report.
Market players said the main theme going forward would be the harvest of cotton crops in the US, China and key countries like India and Pakistan.
Another area would be the pace of demand for cotton in the 2005/06 marketing year (August/July), the analysts said.
Cotton suffered an initial downturn after the opening bell, but trade purchases at the lows was joined later by speculative buying and short-covering to shove cotton near its session highs by the close of business, dealers said.
"We'll see how far this bounce takes us. It's still trading a band from 52 to 57 cents and we would need to see a breakout either way before getting excited about it," one explained.
Brokers Flanagan Trading Corp put resistance in December delivery at 54.50 and 55.35 cents, with support at 53.80 and 53.05 cents.
Floor dealers said estimated final volume totalled 9,000 lots, down from Thursday's tally of 14,963 lots. Open interest fell 2,318 lots to 120,599 contracts as of October 20.