Cotton futures finished higher on Friday ahead of a holiday weekend, as the market defied commodity sector selling caused by risk aversion over Greece's debt plan and China's tightening of bank rules, brokers said. The market will be shut Monday for the US President's Day holiday, with business resuming on Tuesday.
Dealings could also slow next week as No 1 world consumer China goes on holiday to celebrate Lunar New Year. The key March cotton contract climbed 1.47 cents to end at 74.39 cents per lb, after moving from 72.43 to 74.60 cents. The high marked the contract's loftiest level on a daily spot chart since hitting 76.28 cents on January 5. Volume in the March contract hit 9,079 lots by 2:40 p.m. EST (1940 GMT).
Most-active May cotton gained 1.10 cents to conclude at 74.91 cents, trading from 73.21 to 75.09 cents. Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana, said an early round of weakness was caused by worries over a Greek debt rescue plan and China's announcement to tighten bank rules, signalling an attempt to reign in demand.
But cotton futures did not stay at lower levels. Once prices held, investment funds came charging back into cotton and could lead to further gains next week. "A strong market has a good base beneath it," said Stevens. "You have a whole new (set of) funds trying to get on the long side (of cotton)." An additional boost was provided by Friday's release of the US Agriculture Department's weekly export sales report.
USDA said total US cotton sales hit 497,900 running bales (RBS, 500-lbs each), above trade estimates for a range between 350,000 to 450,000 RBs. But most trade sources said the advance in cotton has left demand behind and it may take a correction to stoke consumer buying again.
Broker Flanagan Trading Corp said it sees resistance in the March contract around 74.75 and 75.60 cents, with support between 73.90 and 73 cents. Total volume traded Thursday hit 28,250 lots, against the previous 66,065 lots, according to data from ICE Futures US Open interest in the cotton market stood at 161,158 lots as of February 11, down from the prior count of 161,222 lots, the exchange said.