Cotton futures finished slightly higher on Wednesday with some early buying that was followed by sellers taking profits, but traders said they thought most of the market was sidelined ahead of two key USDA reports later this week.
"We ended up with about 12,000 volume which sounds good, but we ended up going nowhere," said Sharon Johnson, senior cotton analyst at First Capitol Group in Atlanta.
The New York Board of Trade's open-outcry July cotton contract added 0.10 cent to settle at 48.80 cents per lb, after trading between 48.65 and 49.24 cents.
The new-crop December cotton contract added 0.11 cent to finish at 53.75 cents. The rest closed from 0.05 lower to 0.25 cent higher.
IntercontinentalExchange's NYBOT electronic platform for cotton showed the July contract up 0.19 cent at 48.89 cents by 3:42 pm EDT (1942 GMT), and set a trading band from 48.50 to 49.20 cents. Traders said there were strong buyers at the open, but trade sellers took the opportunity at session highs to take profits, but little happened for the rest of the day with many players waiting for the US Department of Agriculture's weekly and monthly reports due Thursday and Friday, respectively.
Johnson said she thought "a good chunk of what happened" on Wednesday was due to traders sidelined ahead of the reports. "We have had quite a bit of business going on. It seems to have slowed down to some degree and now we're just in a wait-and-hold pattern," she said.
Several government reports will be released on Thursday and Friday by the US Agriculture Department. On Thursday, the USDA's weekly export sales data is due. Analysts polled by Reuters on average forecast weekly sales exports at about 525,000 bales. The USDA's monthly supply/demand report comes out on Friday and will contain its first estimate of world conditions in the 2007/08 season.
Of the monthly report, one analyst said, "trying to guess what USDA will say on Friday's report is like throwing darts in a dark room. Interpretation of the report may be even more difficult." Broker Flanagan Trading Corp sees support in the July contract at 48.10 and 47.30 cents, with resistance pegged at 49.25 and 50.05 cents. Floor dealers said estimated final volume was at 12,000 lots, from the prior total volume of 14,376 contracts. Open interest was at 222,770 lots as of May 8, up 900 lots from the previous session.