Cotton futures edged up to a firm close Friday on trade and speculative buying as the market staged a halting recovery from a sell-off caused by a credit squeeze which hit commodity markets yesterday, brokers said. New York Board of Trade's key open-outcry December cotton contract added 0.32 cent to finish at 57.50 cents per lb, dealing from 56.95 to 58.15 cents.
On Thursday, the contract ended at a 10-week low of 57.18 cents in its worst performance since early June. March cotton rose 0.25 to 60.95 cents. The rest added from 0.27 to 0.60 cent. The IntercontinentalExchange NYBOT electronic cotton market showed December up 0.47 cent at 57.65 cents at 2:36 pm EDT (1836 GMT), moving from 56.90 to 58.35 cents.
"We may be up, but that doesn't mean we're done," said Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia, in referring to the nervousness pervading the trade about whether the financial turmoil which rocked financial exchanges was over.
"I don't know if we're out of the woods yet," she added. Fundamentally, analysts said it was still very early in the 2007/08 marketing year and they would need to see what impact the financial gyrations would have on the world's economy and global cotton demand. Some early pressure in cotton trading pushed the market down to a new low, but consumer and trade buying inspired a recovery in fibre contracts."The trade would buy it but the specs and funds keep selling it overhead," a dealer said.
Johnson said the next move of the market is hard to predict. In a report, she said the December contract "could trade down another penny or two, or immediately rebound back toward 60 (cents)." Brokers Flanagan Trading Corp put support for December delivery at 56.50 cents, with resistance at 58.20 and 59.20 cents. Open-outcry volume stood on Thursday at 20,070 lots while screen business reached 19,361 lots. Open interest was at 205,089 lots as of August 16, down 2,183 lots from the previous session.