Cotton futures closed slightly higher Wednesday as investors steadily moved positions out of the spot contract while most awaited a pair of government reports this week, analysts said.
The New York Board of Trade's May cotton contract rose 0.25 cent to settle at 53.16 cents a lb, dealing from 52.75 to 53.20 cents. It was an inside day as the range held within Tuesday's 52.73 to 53.35 band.
July added 0.19 to 54.74 cents and the rest rose 0.05 to 0.25 cent.
Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia, said many in the trade were sitting back to see what comes out of two reports from the US Department of Agriculture.
The first is the weekly export sales report on Thursday and the next would be the more eagerly awaited annual planting intentions data on Friday.
A survey of analysts by Reuters showed US cotton sowings reaching an average of 14.44 to 14.45 million acres in 2006/07, up from the 14.195 million acres planted last season.
"Everybody made money (on cotton) last year. You stick with a winning horse," said Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana.
Johnson said dry conditions in large swathes of the US Southwest meant many farmers had little choice in the matter. "As dry as it is, they can't plant anything else," she said.
On the weekly export sales data, cotton brokers expect US cotton sales to reach around 300,000 to 400,000 running bales (RBs, 500-lbs each), from 466,600 RBs last week.
US cotton shipments of previously booked orders are seen ranging from 350,000 to 450,000 RBs, against last week's 387,800 RBs.
Traders said switch business dominated cotton market dealings since there are only roughly three weeks left before deliveries commence in the May contract.
With open interest in May as of March 28 standing at 88,333 lots, analysts said around 5,000 lots would need to be transferred daily to the back months for an orderly delivery. "They've got to start moving more every day," said Johnson.
Brokers Flanagan Trading Corp put resistance in the May cotton contract at 53.30 and 53.80 cents, with support at 52.75 and 52.10 cents.
Floor dealers said final trading volume was estimated at 16,000 lots, off from Tuesday's tally of 17,793 lots. Open interest fell 1,177 lots to 136,230 contracts as of March 28.