Cotton futures bucked the bearish impact of a government crop report to end higher Thursday and the trade will now wait for leads to see which way fibre contracts will move in the days ahead, brokers said.
New York Board of Trade's December cotton contract climbed 0.55 cent to finish at 48.93 cents per lb, moving from 48.10 to 50 cents. March gained 0.37 to 52.23 cents. The rest rose 0.20 to 0.40 cent. The US Agriculture Department's monthly supply/demand report was termed by the trade as bearish across the board.
USDA reported an increase in world cotton output to 116.19 million (480-lb) bales from the 114.94 million it estimated last month, and cut world consumption to 120.98 million bales from 122.24 million. World ending stocks were raised to 52.26 million bales from 46.73 million.
China's production was increased 1.0 million to 29 million bales and imports were cut 1.0 million to 18.5 million bales. US cotton output was increased to 20.66 million bales from 20.35 million and exports were cut to 16 million from 16.2.
Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia, said it "seemed as though we've priced in a good chunk" of the USDA report.
"It's not as though it's (USDA report) a shock. That's why a lot of it is priced in," she said. Futures initially dipped at the start, but reversed course on commodity fund buying to claw its way to higher ground, dealers said. The market also drew some inspiration from stronger corn and soybeans prices.
For now, analysts are looking toward tomorrow's weekly USDA export sales report to see what kind of demand is shaping up in the 2006/07 marketing year (August/July).
Cotton brokers said they expect total US cotton sales to reach 200,000 to 250,000 running bales (RBs, 500-lbs each), from sales last week at 274,400 RBs.
US cotton shipments of previously booked orders were seen ranging from 50,000 to 100,000 RBs, against 106,100 in last week's report. Brokers Flanagan Trading Corp sees resistance in the December contract at 49.30 and 50 cents, with support at 48.75 and 48.25 cents.
Floor sources said volume traded hit around 22,500 lots, more than double Wednesday's count of 10,794 lots. Open interest fell 397 lots to 183,873 lots as of October 11.