Cotton futures vaulted to a strong close Tuesday on investor short-covering as the market rebounded from Monday's fall to a 3-1/2-month low, brokers said. The key May cotton contract rose 0.23 cent to finish at 41.72 cents per lb, trading from 41.39 to 42.38 cents. July added 0.16 cent to conclude at 43.07 cents.
Volume traded in the May contract was at 6,025 lots at 2:36 pm EST (1936 GMT). "Whichever way the winds are blowing in the stock (markets) is how the biases will stack up in cotton (tomorrow)," said Jobe Moss, analyst for brokers and merchants MCM Inc in Lubbock, Texas.
He said cotton contracts were pounded mercilessly on Monday and the "lack of any significant calamity" likely encouraged fiber contracts to recover although the mood amongst investors remained jittery at best. Analysts said cotton futures are not trading market fundamentals at this time and paying more attention to the gyrations of global stock and crude exchanges.
"For now the bears are still clearly in control," said a report by Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana. He said there are a significant number of (automatic) buy stop (orders) building over the market. They are in abundance above Thursday's 44.90 (cents) high and the 45.25 (cents) weekly high, he explained.
Cotton market players said they will look forward to the weekly export sales report from the US Agriculture Department to gauge how demand is being affected by financial turmoil. After that, USDA's monthly supply/demand report will be handed out on March 11. Brokers put support in the May at 41 cents, with resistance pegged at 43 cents. Volume traded Monday reached 13,266 lots, exchange data showed. Open interest was at 116,372 lots as of March 2 versus the prior tally of 116,304 contracts.