Cotton futures closed on Friday fractionally higher on buying by small speculators in a quiet session and analysts said the market could drift in a narrow band into next week. The benchmark May contract on ICE Futures US rose 0.05 cent to finish at 89.63 cents per lb, dealing from 89.32 to 90.50 cents. For the week, the market is up 2.45 percent.
Volume traded Friday amounted to slightly over 13,100 lots, some 45 percent under the 30-day norm, Thomson Reuters data showed. "The best you could say about it is it held its own," said Mike Stevens, an independent cotton analyst in Louisiana. The longer-term outlook for the market is bearish given rising cotton stocks and the prospect of large northern hemisphere crops in the upcoming 2012/13 marketing season (August/July). Near-term, cotton futures have found strong support at 87 cents, basis May, because it is an area where mill and trade buying has shown up.
Open interest, an indicator of investor exposure, rose for the 11th straight session to 189,321 lots as of March 22, the highest since February 14, ICE Futures US data showed. Investors will be looking at the weekly US CFTC report later on Friday to see if investors continued increasing short positions in the cotton market. Last week, the CFTC said net short positions in the cotton market stood at 7,553 lots, against a net long position of more than 14,000 lots at the start of February. After the CFTC data, the market will turn its focus to next Friday when the USDA releases its keenly awaited annual potential plantings report.