Cotton futures ended higher Thursday on investor buying as tight deliverable supplies gave nearby months a boost although players were still fretting over the fragile state of global economic recovery, brokers said. The December cotton contract increased 0.78 cent to end at 74.71 cents per lb, moving from 73.58 to 74.74 cents. The spot October cotton contract gained 0.80 cent to finish at 79.57 cents.
Volume traded in the December contract stood at 12,651 lots at 2:30 pm EDT (1830 GMT).
October enjoys a 4.86-cent premium over key December. "The lack of (certificated cotton) stocks has the market inverted," said Sharon Johnson, cotton expert at First Capitol Group in Atlanta, Georgia. She said that further out, there is no shortage of cotton but certificated cotton stocks currently stand at 75,782 (480-lb) bales as of July 22. A few weeks ago, they reached over 1.0 million bales. The market may have also been buoyed in part by the weekly export sales report from the US Agriculture Department which showed total US cotton sales at 382,000 running bales (RBs, 500-lbs each), up from 354,200 RBs in last week's report.
Technically, the 20-day and 200-day moving averages in cotton are crossing to the downside which could eventually undermine the advance. The 20-day stands at 76.34 cents and the 200-day at 76.36 cents. Both are about to cross to the downside and that would normally be negative for cotton futures. Brokers Flanagan Trading Corp put support in the December contract at 74.25 and 73.30 cents, with resistance at 75.10 and 76.15 cents.
Volume traded Wednesday amounted to 16,839 lots, from the prior tally of 18,098 lots, ICE Futures US data showed. Open interest in the No 2 cotton market was at 158,960 lots as of July 21, compared to the prior 157,763 lots, the exchange said.