Cotton futures settled higher on Monday on modest investor buying inspired by a firmer stock market as the trade awaited the release of a key crop report at months end, brokers said. The key May cotton contract gained 0.22 cent to end at 43.05 cents per lb, trading from 42.76 to 43.57 cents. July added 0.09 cent to 43.95 cents. Volume traded in the May contract amounted to 7,381 lots at 2:34 pm EDT (1834 GMT).
"Were hooked to the bumper of the stock market," said Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia. He said fibre contracts would take their cue from the performance of the stock market over the next few days. The market will then turn its attention to the US Agriculture Departments annual potential plantings report due out at the end of the month.
The industry group National Cotton Council said in its annual survey that US farmers will plant 8.1 million acres to cotton in 2009, an amount that would be the lowest in a quarter century. But the USDA outlook meeting forecast cotton sowings at around 8.5 million acres and many commercial market players in the trade feel it would range from 8.5 million to 9.0 million acres.
Early investor sales dropped cotton to its lowest level for the day, but then a steady barrage of buying gradually hoisted cotton to its session peak. "It then backed off at the end, but its really range-bound at this time," a dealer said. Brokers Flanagan Trading Corp put support in the May contract at 42.75 and 41.85 cents, with resistance at 43.60 and 44.75 cents. Volume traded Friday reached 11,272 lots, exchange data showed. Open interest was at 125,112 lots as of March 13 versus the prior tally of 123,526 lots.