Cotton futures ended at a 6-1/2-month high on Thursday due to all-around buying, but analysts feel the market's advance could slow down because it is a bit overbought, brokers said. The most-active July cotton contract climbed 1.01 cents to close at 54.35 cents per lb, dealing from 52.66 to 54.45 cents. It was the highest finish for cotton on the second position charts since the middle of October 2008.
Volume traded in the July contract was at 9,626 lots at 2:39 p.m. EDT (1839 GMT). Spot May cotton went up 0.65 cent to end at 53.49 cents. But she said cotton futures are already running into heavy resistance at these levels and said a pullback may be in order shortly. Analysts said the buying has been done by mills fixing their cotton orders and investment funds who feel the market has been undervalued for a while and will likely headed higher.
They said that if sustained, the key July cotton contract may next target the area around 55 to 56 cents. Cotton export sales were still running at a steady peace although the rally may force some buyers to back off. The US Agriculture Department's weekly export sales report showed total US cotton sales at 269,300 running bales (RBs, 500-lbs each), from sales last week of 313,700 RBs and trade belief it would range from 200,000 to 300,000 RBs.
US cotton export shipments stood at 291,300 RBs, from 239,200 RBs in last week's data and trade belief it would reach between 200,000 and 250,000 RBs. Brokers Flanagan Trading Corp sees resistance in the July cotton contract at 55.10 and 56 cents, with support at 54 and 53.05 cents.
Open interest in the cotton market was at 120,863 lots as of April 29, from the prior tally of 119,982 lots, according to ICE Futures US data. Total volume in the cotton traded Wednesday reached 13,768 contracts, from the previous tally of 10,939 lots, exchange data showed.