NEW YORK, May 23: NY cotton futures settled higher on Wednesday on technically-inspired speculative buying, with operators betting the market will hoist the market past topside technical barriers in the coming days.

From what we’ve done, we’re looking for follow-through buying tomorrow, said Frank Weathersby of Affinity Trading in Fort Walton Beach, Florida.

Analysts said cotton is trying to race past the 37.00/15 cents level in July in an attempt to spark stops which could suck in sustained fund buying in the market.

July cotton jumped 0.70 cent to finish at 37.15 cents a lb, trading from 36.50-37.20 cents. New-crop December shot up 0.78 cent to 41.29 cents. The rest went out 0.73-0.94 cent better.

Cotton popped higher at the start, uncovering some stops in July above 36.65 cents although scale-up trade selling emerged at those levels, floor sources and brokers said.

There was good volume in the market going into the close.

Mike Stevens of Swiss Financial Services in Mandeville, Louisiana said the market’s surge was aided by option-related activity.

Today’s close should be supported by another week of good export and improving domestic consumption.

We have now negated the unforeseen, surprising break that occurred on April 24 that took April to 32.95 (cents). Globally, foreign mills are beginning to scramble for extended coverage from merchants that are beginning to back off a bit on their offers, he said.

Technically, chartists peg resistance in the July cotton contract at 37.20 and 37.80 cents while support would revert back to 36.50 and 36 cents.

Looking forward to the weekly USDA export sales report due out on Thursday at 0830 EDT, cotton brokers said net upland cotton sales should range from 150,000 to 200,000 (480-lb) bales, from last week’s level of 185,700 bales.

They said shipments are seen slipping slightly to about 200,000 to 210,000 bales, from 227,500 bales last week.

Industry analysts said the monthly US Census Bureau data on annualized US cotton usage should range from 7.8-8.0 million (480-lb) bales, against an estimate last month of 7.65 million bales.

USDA, in its monthly production report, forecast US cotton consumption in 2001/02 at 7.6 million. The US Census Bureau releases its consumption report on Friday.

I would not be surprised to see Aprils rate nudging 8.0 million bales on an annualized basis. Psychologically, an annualized rate beginning with an “8” would probably help put even more fundamental support beneath the market, the weekly commentary by Stevens said.

Floor sources said estimated final volume stood at 7,500 lots, from the previous count of 8,431 lots.

Open interest in the cotton market fell 22 lots to 68,553 lots as of May 21. —Reuters