NEW YORK, Dec 20: NY cotton futures settled higher Friday on mostly speculative buying, but a touch of trade sales and profit-taking trimmed the market’s gains in modest dealings, traders said.

March surged 1.96 cents to conclude at 71.29 cents a lb, trading from 69.02-71.92 cents. May gained the same to 72.32 cents. The rest jumped 1.05-1.85 cents.

Sharon Johnson, cotton expert for Frank Schneider and Co. Inc. in Atlanta, said a paucity of selling at the start and speculative buying which touched off automatic buy-orders catapulted cotton contracts to their highs for the day.

Some of the early steadiness in cotton may have also been derived from the positive backdrop provided by the news that China signed agreements to buy 2.5m tons of soy from the US.

Traders said they hope China, which has sparked a furious rally in the market this year, will return and purchase sizable quantities of cotton in the first quarter of 2004.

Mike Stevens of Swiss Financial Services in Mandeville, Louisiana, said early business was thin, though.

This allowed “fast, fleeting exaggerated moves” as buying by small speculators touched off the buy-orders once March sped past 70 cents, he said.

But once March stopped short of 72 cents, a lack of follow-through interest sent cotton reeling back. The specs just quit buying, said Johnson.

Stevens added: As the buying faded, the market became quite vulnerable to a quick sell-off.

Analysts said the market may stay in a wide band between 68 and 72 cents, basis the benchmark March contract, through the end of the year.

Trading will be truncated over the next two weeks. The NY cotton futures and options market will be shut Dec. 24 and 25, and then on Jan. 1 and 2. There will only be three trading days each in the next two weeks.

Technically, dealers see resistance for March cotton at 71.90 cents, with support at 71.10 and 70.50 cents. Floor dealers said estimated final volume hit 10,500 lots, against the previous tally of 5,452 lots. Open interest in cotton rose 155 lots to 79,283 lots as of Dec. 18.—Reuters