Cotton futures finished higher Wednesday on modest speculative short-covering as the market quietly recovered after dropping to a five-month low in the previous session, brokers said. The New York Board of Trade's open-outcry July cotton contract rose 0.51 cent to finish at 51.23 cents per lb, dealing from 50.72 to 51.40 cents.
The new-crop December contract gained 0.35 to 56 cents, moving from 55.70 to 56.35 cents. Back months increased from 0.15 to 0.40 cent. IntercontinentalExchange's NYBOT electronic platform for cotton showed the July contract up 0.48 cent to 51.20 cents at 2:30 pm EDT (1830 GMT), moving from 50.72 to 51.40 cents.
"It's like (watching) coat on coat on coat of paint (dry)," said Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia. She said short-covering off the lows for the day and a lack of follow-through pressure enabled fibre contracts to rebound, but the tone was decidedly quiet.
Traders said the old-crop July contract may be poised to climb higher after closing over its previous contract lows of 51.07 and 55.92 cents, respectively. On another front, the market is expecting the weekly export sales report of the US Agriculture Department to show strong US cotton sales.
Brokers said that total US cotton sales should range from 500,000 to 650,000 running bales (RBs, 500-lbs each), down from last week's 834,000 RBs. They said the bulk of the sales will likely be from top cotton consumer China, which last week bought 489,600 RBs of upland cotton alone.
US cotton shipments of previously booked orders are seen reaching from 250,000 to 300,000 RBs, against last week's 273,000 RBs, the brokers said. Brokers Flanagan Trading Corp sees resistance in the July contract at 52 and 52.45 cents, with support at 51.10 and 50.60 cents.
Floor dealers said estimated final volume stood at 7,000 lots, compared with the prior total volume of 20,082 contracts. NYBOT said electronic trading volume Tuesday amounted to 6,269 lots. Open interest was at 220,971 lots as of April 24, up 289 lots from the previous session.