Cotton futures edged up to a firm close on Monday on speculative buying as most players appear to be on the sidelines waiting for release of a key government supply/demand report on Wednesday, dealers said.
The New York Board of Trade's benchmark December cotton contract rose 0.42 cent to conclude at 52.30 cents per lb, trading from 51.88 to 52.35 cents. It was an inside day since the range was within Friday's 51.20 to 53.15 cents band. The rest went up from 0.30 to 0.50 cent.
"We've had a sharp move down and we're consolidating," said Frank Weathersby, an analyst for brokers Affinity Trading in Fort Walton Beach, Florida. "It's an inside day looking for direction."
Large swathes of the US cotton belt have reeled from a withering drought that has stunted the growth of cotton, with the top growing state of Texas taking a serious hit. Analysts said the state, which produced over 8.0 million (480-lb) bales of cotton in 2005/06, may only produce 4.0 to 5.0 million this year.
Most believe the US Agriculture Department, which is due to hand out its monthly supply/demand report on Wednesday, will have to cut its estimate of US cotton production.
But a detailed picture of the crop will only be available in the August supply report when the first field surveys of US cotton farms are included in the data, the analysts said.
For Monday's dealings, cotton contracts opened at its highest level for the day, slipped to unchanged and then rode a late wave of buying by small speculators to post modest gains, the dealers said. "It's been real dull, which is the best thing you can say about it," one said.
Brokers Flanagan Trading Corp put support in the December contract at 52.15 and 51.60 cents, with resistance at 53 and 53.55 cents. Floor dealers said estimated final volume came to 5,500 lots, down from Friday's count of 20,326 lots. Open interest rose 93 lots to 162,098 contracts as of July 7.