Cotton futures settled higher on Friday on month-end booksquaring as the market defied weakness in other markets caused by a firm dollar, with analysts saying slack demand and the ongoing US harvest could lead to losses next week. The December cotton contract rose 0.07 cent to end at 67.64 cents per lb, trading from 66.57 to 67.93 cents.
It was an inside day because the range was within Thursday's 66.44 to 68.34 cents band.December contract volume reached 12,705 lots at 2:43 pm EDT (1843 GMT). March cotton added 0.35 cent to close at 70.89 cents, trading between 69.70 and 71.14 cents.
Sharon Johnson, cotton expert at First Capitol Group in Atlanta, Georgia, said cotton market players are simply "not looking at the rest of the (commodity) board" as the end of October sparked covering in the market. She believes that once the covering has run its course for the week, the market would see technical weakness come in.
Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia, said cotton is "acting strong" and he wondered if problems plaguing the cotton harvest in other countries like China is supporting values. Analysts said any fall in cotton futures has often run into investment fund buy-backs and that is seemingly borne out by the steady rise in open interest in fibre contracts.
Open interest in the cotton market climbed to 186,551 lots as of October 29, having risen 72.32 percent since the end of the second quarter of 2009 when open interest in cotton stood at 108,256 lots, according to exchange data. Most of the buying spree has taken place in the last few weeks. Open interest as of September 9 was only at 127,022 lots.
Brokers Flanagan Trading Corp sees resistance in the December contract at 68.40 and 69.35 cents, with support at 67.50 and 66.65 cents. Total cotton volume traded Thursday hit 25,091 lots, from the prior tally of 19,457 lots, ICE Futures US said. Open interest in cotton stood at 186,551 lots as of October 29, from the prior count of 185,431 lots, the exchange said.