Cotton futures finished higher Tuesday on speculative buying and a close above a key technical target may spark further gains in fibre contracts, brokers said. ICE Futures open-outcry March cotton contract gained 0.05 cent to close at 63.50 cents per lb, trading between 63.45 and 64.40 cents.
May added 0.01 to 65.11 cents. One contract aside, the rest went up 0.01 to 0.20 cent. The ICE March electronic cotton contract shed 0.04 cent to 63.41 cents at 2:51 pm EST (1951 GMT), dealing from 63.30 to 64.42 cents.
Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana, said if March closes above 64 cents in the days ahead, a potential near-term bottom at 63 cents would likely be in place.
"They felt the vulnerability of the upside and went after it," he said. "You've got some technical potential today." Industry analysts said a finish over 64.25 cents, basis March, would confirm for most of the trade that the recent technical liquidation by investors is about done.
"Once the buying slowed, some profit taking and scattered new selling set prices back a bit. However, unless the market shows more vulnerability than this, look for another round of spec buying to take us above 64.25 (cents, basis March) again," said Stevens in a report.
For now, the trade is monitoring the harvest of the US cotton crop as it winds down in most states in the southern part of the country. The next bit of news the market is looking toward would be the US Agriculture Department's monthly supply/demand report which is due out next Tuesday.
Brokers Flanagan Trading Corp sees resistance in the March open-outcry cotton contract at 63.70 and 64.55 cents, with support at 62.85 and 62.20 cents. Open-outcry cotton volume Monday was at 3,995 lots and screen trade at 15,147 lots. Open interest in the market rose 443 lots to 210,832 lots as of December 3, according to exchange data.