Cotton futures closed higher on Monday on another round of investor short-covering as fiber contracts built on their gains of last week and may edge up in the days ahead, brokers said. The December cotton contract in New York rose 0.97 cent to conclude at 62.21 cents per lb, ranging from 60.47 to 62.36 cents.
Volume traded in the December contract reached 8,989 lots at 2:46 pm EDT (1846 GMT). March cotton was up 0.71 cent to finish at 64.29 cents, dealing from 62.84 to 64.41 cents. Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia, said cotton bucked weakness in the grains market and a firmer dollar to run higher.
She said the next move of cotton will depend on whether it can extend its gains tomorrow because a failure could prompt speculative liquidation. News of a trade dispute over tire duties between China, the top consumer of cotton in the world, and the US would be worrying for American cotton exporters, Johnson said. China has requested World Trade Organisation (WTO) consultants with the US over the issue.
Johnson said the trade ought be worried that China could retaliate against US cotton since India cotton exporters are waiting "in the wings." Analysts said a close over 62.25 cents in the key December contract would lead to a move toward the 65 cents high it recently hit. "The whole action is technical in nature. The specs buy it up to see if can move higher. If we fail, we go off in the opposite direction," one said.
Brokers Flanagan Trading Corp sees resistance in the December cotton contract at 63.05 and 63.95 cents, with support at 62.20 and 61.35 cents. Total volume traded Friday reached 15,163 lots as of September 11, from the previous tally of 6,605 lots, exchange data showed. Open interest was at 128,316 lots as of Sept. 11, from the previous count of 127,355 contracts, ICE Futures US said.