US cotton futures were slightly higher on Wednesday, trading in a narrower range as volumes dropped and investors became more nervous as the US harvest nears its end and uncertainty over the US budget talks heighten. Prices, which have been stuck between 70 and 74 cents per lb for the past six weeks, seesawed on either side of 73 cents on Wednesday.
The most-active March contract on ICE Futures US settled up 0.13 cent, or 0.18 percent, at 73.04 cents per lb, with trading in a narrow range of 0.83 cent. Just under 9,500 lots of March contracts changed hands on Wednesday, well below recent averages.
"Producer-related selling moved lower in recent weeks from the mid-to-upper 70s as US farmers became more anxious to sell at strong basis levels," said INTL FCStone analysts. At the same time, Chinese mills that were previously buying below 70 cents are now closer to 72 cents, they said. The December contract which expires on Thursday, eased 0.13 cent to 72.04 cents per lb, with just 248 lots of open interest left and just 12 lots traded on the day.
Traders fear selling pressure on prices in the month ahead because some growers are still have unsold material, holding out for a rebound in prices. "We get so much business done below 70 cents, but now business has slowed to a trickle," said a merchant in Texas. But with supplies plentiful and lackluster appetite for fibers, there may be little momentum to push prices much higher. The market appears to find significant resistance around 75 cents.
Certified stocks rose again hitting 81,973 lots, its highest level since July 18 and returning inventories to levels that are more inline with historic averages for this time of the year. Inventories have risen every trading day since October 15 as the US harvest got under way. Stocks had depleted to 8,000 before the harvest. That is the lowest since records began in 2000.
The gains were in line with the grains markets - soybeans climbed to their highest level in nearly a month partly due to strong export demand. The US cotton market will be eyeing weekly export sales for signs of a pick up when data from the Department of Agriculture is released on Thursday. Last week's data showed some 330,000 running bales of Upland and Pima sold in the week to November 22, down from the previous week and the accumulated sales for the marketing year which started on August 1 have lagged last year.