US cotton futures finished higher on Wednesday on investor and speculative buying inspired in part by a weak dollar, dealers said. Fibre contracts also seemingly tracked the early strength and late weakness of grains prices as players awaited a US government report on cotton export sales, they said. The key March cotton contract on ICE Futures US climbed 3.50 cents to settle at $1.4894 per lb, dealing from $1.4776 to up its 5.00-cent limit at $1.5044.
Trading volume of around 22,200 lots was about 15 percent above the 30-day norm, Thomson Reuters preliminary data showed. Jobe Moss, an analyst for brokers and merchants MCM Inc in Lubbock, Texas, said he feels there is more downside risk to cotton prices in the weeks ahead although the March contract "seems content" to stay in a band for now between $1.40 and $1.50.
Sharon Johnson, senior cotton analyst at Penson Futures in Atlanta, said cotton appeared to track initial strength in corn futures in Chicago but weakened when the corn market slid. Traders said the market may have also derived some inspiration from stronger Chinese cotton prices. May cotton futures on the Zhengzhou Commodity Exchange last traded at 29,390 yuan per tonne, up 510 yuan on the day. On Thursday, the market will be looking at the US Agriculture Department's weekly export sales report to see if the recent robust pace of Chinese cotton buying has slackened.
Cotton brokers expect total US cotton sales to range between 300,000 and 400,000 running bales (RBs, 500-lbs each), against sales in last week's report of 357,600 RBs. On February 4, the market will be waiting for the closely watched plantings survey by US industry group National Cotton Council. A Reuters survey at the Beltwide Cotton conference this month forecast US 2011 cotton plantings around 12.4 million to 12.5 million acres, a five-year high and up from last year's sowings of 11.04 million acres.