Cotton futures settled firmer on Monday on steady investment fund buying although profit-taking knocked fiber contracts back from highs reached earlier in the session, brokers said. ICE Futures' open-outcry March cotton contract increased 1.24 cents to end at 71.20 cents per lb, trading from 71.15 to the 3.00-cent limit up at 72.96 cents, which also happened to be a contract high.
May cotton went up 1.40 cents to 73.04 cents. Back months went up from 1.35 to 2.65 cents. ICE March electronic cotton futures also jumped 1.44 cents to 71.40 cent at 3:13 pm EST (2013 GMT). Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia, said fiber contracts surged up the 3.00-cent limit but once prices in the grains complex in Chicago broke down, cotton followed suit.
She said cotton may need to "back up a little bit" because the recent rally seemed overdone. Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana, said there was a "huge flow of money flowing into commodity markets" and cotton has benefited from that influx of investment funds into the sector. The focus of the market now will turn gradually to the survey by industry group National Cotton Council of potential cotton plantings for 2008 which is due to be released in four weeks' time.
In a report, Johnson said: "The battle for acres between corn and soybeans will not wind down until one emerges victorious this spring and unless (the) new crop (December) cotton (contract) pushes 7.0 to 10 cents high prior to final planting decisions." Brokers Flanagan Trading Corp sees resistance in the March open-outcry cotton contract at 71.25 and 72.60 cents, with support at 70 and 69.30 cents.
Open-outcry volume on Friday was at 10,690 lots and screen business was at 37,177 lots. Open interest in the cotton market climbed 4,944 to 259,687 lots as of January 11, exchange data showed.