Cotton futures closed higher Wednesday on switch trade and speculative buying and the strong performance may nudge prices higher before the week is done, analysts said. The New York Board of Trade's open-outcry July cotton contract climbed 0.84 cent to end at 52.44 cents per lb, dealing between 51.31 and 52.60 cents.
The new-crop December cotton contract rose 0.70 to 57.99 cents. Back months increased from 0.40 to 1.85 cents. IntercontinentalExchange's NYBOT electronic cotton market showed the July contract up 0.71 cent to 52.31 cents at 2:35 pm EDT (1835 GMT). Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana, said automatic buy order stops kicked in once the July contract raced over 52.20 cents.
He said the close above 52.40 cents meant the market will get more momentum to march higher. Stevens and other dealers said talk about China's cotton import quota also bolstered the market. The dealers said most of the running in early business was in the switch as players moved positions out of July before deliveries are posted on June 25.
Open interest in the July contract fell 10,346 lots to 61,265 contracts as of June 12 while interest in the December contract increased 8,772 to 119,779 lots. On a fundamental level, the trade will take a look at the US Agriculture Department's weekly export sales report on Thursday. Most of their focus though will be on the USDA's planted acreage report coming out on June 29.
Brokers said they expect total US cotton sales to range from 150,000 to 250,000 running bales (RBs, 500-lbs each), from sales last week at 218,400 RBs. US cotton shipments of previously booked orders were seen running from 400,000 to 500,000 RBs, against 407,900 RBs in last week's data.
Broker Flanagan Trading Corp sees resistance in the July contract at 53.05 and 53.95 cents, with support at 52.25 and 51.60 cents. Floor dealers said final estimated open-outcry volume stood at 30,000 lots, from the prior volume of 31,297 lots. Screen trade Tuesday was at 20,427 lots, NYBOT said. Open interest was at 217,281 lots as of June 12, down 1,288 lots from the previous session.