Cotton futures settled up and at a three-month high Thursday on speculative fund buying and talk that top consumer China was booking or about to place orders in the market, analysts said. New York Board of Trade's open-outcry July cotton contract climbed 1.56 cents to end at 54 cents per lb, moving from 53.25 to 54.50 cents.
It was the highest close for cotton since mid-March. New-crop December cotton rose 1.02 to 59.01 cents and the rest advanced from 0.80 to 1.00 cent. IntercontinentalExchange's NYBOT electronic cotton market showed the July contract up 1.66 cents at 54.10 cents at 2:31 pm EDT (1831 GMT). Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia, said the rally got primed when cotton futures "closed above some key levels." Analysts said the close on Wednesday over 52.40 cents for July delivery encouraged investors to pile into the market.
The robust performance of grains in Chicago bolstered sentiment here, along with talk about China's cotton import quota. "The way we wound up yesterday really set this up," a dealer said, adding the market should gain more ground before the weekend.
Some switch trade was also seen in the market. Open interest in the July contract fell 6,612 lots to 54,653 lots as of June 13 while interest in the December contract increased 11,836 contracts to 131,615 lots. Meanwhile, the US Agriculture Department's weekly export sales report showed US cotton sales at 185,000 running bales (RBs, 500-lbs each), from 218,400 RBs last week and trade belief it would range from 150,000 to 250,000 RBs.
US cotton shipments of previously booked orders hit 451,600 running bales (RBs, 500-lbs each), from 407,900 RBs last week and trade expectations of 400,000 to 500,000 RBs.
Brokers Flanagan Trading Corp put resistance in the July contract at 54.60 cents, with support at 53.95 and 53.05 cents. Floor dealers said final estimated open-outcry volume stood at 37,000 lots, versus the prior volume of 31,218 lots. Screen trade Wednesday was at 26,038 lots, NYBOT said. Open interest was at 223,478 lots as of June 13, up 6,197 lots from the previous session.