Cotton futures finished marginally easier Wednesday on investor sales, but the market is holding well after pulling back from a four-month top and could grind higher in the coming sessions, brokers said. The key March cotton contract fell 0.28 cent to close at 51.07 cents per lb, in a band from 50.44 to 51.70 cents.
On Monday, the contract finished at 52.07 cents in the highest close for cotton on a spot basis since trading over 52.50 cents in October 2008. Volume traded in the March contract was at 6,047 lots at 2:41 pm EST (1941 GMT). The May contract lost 0.20 cent to end at 51.55 cents. Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia, said fibre contracts should extend their consolidation given the dearth of leads at this time.
The tendency among fibre contracts to pull back because the market is a bit overbought has been offset a little on Wednesday by steadier crude and grain values, she added. Analysts said that for the second day running, the March cotton contract held the Monday low of 50.31 cents and this may lead to further gains in the coming sessions.
Looking toward the weekly export sales report from the US Agriculture Department, cotton brokers said they expect total US cotton sales to range between 150,000 and 250,000 running bales (RBs, 500-lbs each). Last week, USDA said sales stood at 486,800 RBs. Brokers said they feel US cotton export shipments will hit around 200,000 RBs, from 158,500 RBs in last week's data.
Brokers Flanagan Trading Corp put resistance in the March cotton contract at 51.60 and 52.45 cents, with support at 50.50 and 49.60 cents. Volume traded Tuesday reached 15,382 lots, exchange data showed. Open interest was at 131,102 lots as of January 27, up from 130,096 lots in the previous session.