Cotton futures rallied on a steady barrage of investor short-covering to finish sharply higher Wednesday, and the market's firm tone was expected to survive the long holiday weekend, brokers said. New York agricultural commodity markets will be shut on Thursday for a holiday. Trading on Friday will end early at 1300 EST (1800 GMT) instead of the normal closing time of 1515 EST.
The March cotton contract climbed 2.80 cents, or over 6.0 percent, to end at 46.55 cents per lb, dealing from 43.75 to 46.63 cents. Volume traded in the March contract was at 7,953 lots at 2:36 pm (1936 GMT). The May cotton contract rose 2.39 cents to finish at 46.10 cents.
"It's impressive," said Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia. She said the news on poor economic figures was easily absorbed by the market and it seems most players are starting to look "beyond the bad news." The market has now accepted that there is a recession under way in the United States, but the focus will now turn to how soon it will end and the recovery can kick off, Johnson explained.
The only problem for the cotton market would be if financial markets again implode, but if that is not the case cotton prices may have seen a near-term bottom, dealers said. Looking toward the weekly US Agriculture Department weekly export sales report, cotton brokers said they expect total US cotton sales to range from 200,000 to 250,000 running bales (RBs, 500-lbs each) against sales last week of 203,100 RBs.
They said US cotton export shipments should stand at around 200,000 RBs, versus 240,900 RBs in last week's report. Brokers Flanagan Trading Corp sees support in the March cotton contract at 45.80 and 44.65 cents, with resistance at 46.65 and 47.85 cents. Volume traded Tuesday was at 12,088 lots, according to exchange data. Open interest in the cotton market fell 2,449 lots to 128,157 lots as of November 25, it said.