Cotton futures finished mixed Monday as speculative fund buying erased early losses from profit-taking and analysts said the bullish outlook of the market may keep losses at a minimum in the days ahead. ICE Futures open-outcry December cotton contract went up 0.15 cent to settle at 66.23 cents per lb, dealing from 65.15 to 66.70 cents.
It was the highest close for the contract since trading around 67 cents in mid-July. March cotton added 0.21 to 69.25 cents. The rest lost from 0.10 to 0.42 cent. The ICE electronic cotton market showed the December contract 0.14 cent higher at 66.22 cents at 2:48 pm EDT (1848 GMT), moving from 65.12 to 66.70 cents. "Cotton is exhibiting bullish characteristics," said Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia.
He said the ability of cotton to hold at an area above 65 cents, basis December, sparked short-covering and seemed to confirm that the market's bullish outlook would prevent any sharp losses in fibre contracts.
Expectations that US cotton plantings in 2008 will suffer because of sharp rallies in the prices of corn and wheat among others has sparked an advance in cotton as well.
The surge in cotton to its highest level in over half a year was also supported by a surge in other commodity markets. "Cotton futures are now within range of reaching the highs of 68.80 (cents) seen on the December contract back in mid-July, and it is likely that those highs will be taken out this week if fund buying persists," said a daily commentary by brokers Flangan Trading Corp.
The report added that "buying is likely from cotton pools, also, as they attempt to improve the averages they have achieved for cotton growers." Flanagan Trading sees resistance in the open-outcry December cotton contract at 66.25 and 67 cents, with support at 65.60 and 64.85 cents. Open-outcry cotton volume Friday was 7,052 lots, while screen business reached 18,005 lots. Open interest in the cotton market rose 1,968 lots to 221,828 lots as of September 21.