Cotton futures closed firmer Wednesday on investor buying inspired in part by strength in other commodity markets, but fibre contracts are haunted by weak demand and ample supplies, brokers said. ICE Futures' July cotton contract rose 0.21 cent to end at 70.98 cents per lb, trading from 70.50 to 71.55 cents.
The new-crop December cotton contract added the same to 79.83 cents, dealing from 79.26 to 80.30 cents. Volume traded in the July contract at 3:15 pm (1915 GMT) was at 6,959 lots while December's tally was at 3,961 lots. "If it weren't for crude and the strength in Chicago's grain markets, we wouldn't be here," said Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia.
A rip-roaring rally in crude sent its price to a record over $132 a barrel while prices of grains like wheat, corn and soybeans remained strong late in the session. But analysts said gains in cotton were limited by abundant supplies and less-than-inspiring demand this season. "Cotton's fundamentals are not nearly as strong as these other markets," said Johnson.
Futures are also pinned in a wide band running from 70.50 to 72.50 cents in the July contract. A move to the lows would generate trade fixation buying and short-covering, while a challenge of 72.50 cents would often bring on profit-taking and trade sales.
The market will watch the US Agriculture Department's weekly export sales data on Thursday. Cotton brokers believe total US cotton sales may reach 200,000 to 400,000 running bales (RBs, 500-lbs each), from last week's 241,800 RBs. US cotton shipments of previously booked orders are seen hitting from 200,000 to 300,000 RBs, versus 285,400 RBs in last week's report. Brokers Flanagan Trading Corp sees resistance in the July cotton contract at 71.25 and 72.50 cents, with support at 70.60 and 69.80 cents. Volume traded Tuesday reached 31,716 lots, the exchange said. Open interest in the cotton market rose 3,448 lots to 264,285 lots as of May 20, it added.