Cotton futures closed at a 14-week top Friday on all-around buying sparked by news a major merchant took out significant amounts of cotton from the exchange, and on large export sales, brokers said. The key March cotton contract climbed 1.71 cents or 3.49 percent to end at 50.64 cents per lb, trading from 48.89 to 51.55 cents.
On a spot basis, it was the highest close for cotton since the middle of October 2008 when it traded above 52.50 cents. Volume traded in the March contract was at 15,119 lots at 2:52 pm EST (1952 GMT). The May contract went up 1.29 cents to conclude at 50.77 cents.
ICE Futures US said a total of 523,856 (480-lb) bales were decertified, leaving total stocks as of Thursday at 149,929 bales. Traders said the decertified cotton was reportedly taken by major merchant Cargill Cotton and seemed to be bound for customers in places like China. The rally was also aided by the US Agriculture Department's weekly export sales report.
USDA said total US cotton sales hit 486,800 running bales (RBs, 500-lbs each), against 125,000 RBs last week and trade expectations it would range from 150,000 to 250,000 RBs. China, the world's top consumer of cotton, led the buyers of upland cotton with 249,700 RBs. US cotton export shipments reached 158,500 RBs, from 200,200 RBs last week and trade forecasts it would hover around 200,000 RBs.
Johnson said cotton prices now appear set to make a run toward the 55 cents area. She believes a target of 55 to 57 cents in the spring is likely for cotton futures. Broker Flanagan Trading Corp said it sees resistance in the March cotton contract at 51.60 cents, with support at 50.50 and 49.60 cents. Volume traded Thursday reached 10,402 lots, exchange data showed. Open interest in the cotton market was at 131,564 lots as of January 22, from 130,446 lots in the previous session, it said.