Cotton futures closed higher Thursday on technically inspired investor buying as the market bucked weakness in other financial exchanges, brokers said. The key March cotton contract increased 1.70 cents to close at 48.93 cents per lb, trading from 47.12 to 49.14 cents. Volume traded in the March contract was at 6,597 lots at 2:39 pm EST (1939 GMT).
The May contract went up 1.69 cents to conclude at 49.48 cents. Jobe Moss, analyst for brokers and merchants MCM Inc in Lubbock, Texas, said the inability of the market to push lower early in the session prompted short-covering late on Thursday. "It couldn't generate momentum downside," he said. "It's a (sheer) lack of follow-through selling." Once the March contract raced past 48 cents, automatic buy orders kicked in and powered fibre contracts higher.
"Cotton is obviously marching to its own little drum," added Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana. Analysts said some support for cotton may have come from reports that China, the world's biggest consumer of cotton, may see a further reduction in plantings for 2009. Most in the trade continued to keep an eye on soybean futures in Chicago, especially since many American farmers are seen switching acreage away from cotton and into beans.
Looking toward the US Agriculture Department's weekly export sales report, cotton brokers said they expect total US cotton sales to range from 150,000 to 250,000 running bales (RBs, 500-lbs each), from 125,000 RBs in last week's report. The brokers said they expect total US cotton sales to hit around 200,000 RBs, from 200,200 RBs last week.
Brokers Flanagan Trading Corp said it sees resistance in the March cotton contract at 48.95 and 49.60 cents, with support at 48 and 47.15 cents. Volume traded Wednesday reached 9,411 lots, exchange data showed. Open interest in the cotton market was at 130,446 lots as of January 21, from 130,358 lots in the previous session, it said.