NEW YORK, June 25: Cotton futures finished on Friday at a six-week high on speculative fund buying and concern over possible hot and dry weather in several cotton-producing countries next week, analysts said.
The New York Board of Trade’s key December cotton contract soared 1.33 cents to finish at 54.79 cents a lb, near the top of its 53.64 to 54.80 cents band. It was the highest close for the contract since ending at 55.11 cents on May 12.
The spot July contract rose 0.48 cent to 50.13 cents. The rest gained 1.00 cent to 1.21 cents. It’s acting so strong, said Jobe Moss of brokers and merchants MCM Inc. in Lubbock, Texas. We might go a little higher early next week.
Analysts said cotton market players were turning their attention to growing conditions in the United States and in China, which is the world’s top producer and consumer of cotton.
There may be some worries that searing weather could hit Chinese cotton farms along with those in the southwestern United States, they said.
A report by cotton marketing analyst O.A. Cleveland said Chinese officials are already pointing out that cotton production in the Asian nation will be up to 15 million (480-lb) bales less than demand.
Since China has very little in the way of domestic carryover stocks, they are expected to require imports of 13.5 to 14.5 million bales. The US will be the primary market for Chinese purchases, Cleveland said, adding that it is this scenario that bodes well for higher prices for the coming season.
Separately, open interest in the July cotton contract as the market went into first notice day for deliveries amounted to 4,277 lots as of June 23, down 5,066 lots from the previous session.
Brokers Flanagan Trading Corp. sees support in the December cotton contract at 54.30 and 53.90 cents, with resistance at 54.95 and 55.60 cents.
Floor dealers said estimated final trading volume hit 17,000 lots, from the prior 16,871 lots. Open interest in the market sank 3,586 lots to 90,138 lots as of June 23. —Reuters
