NEW YORK, Oct 27: NY cotton futures settled on a firm note Friday, the first time it has done so in seven sessions, as speculative shortcovering hoisted fiber prices away from near 30-year lows.
It seems weird to see it up on the day, Keith Brown, president of commodity trading firm Keith Brown and Co. in Moultrie, Georgia, said. We got a little exhaustion in here.
Traders said the poor fundamental outlook of cotton remains unchanged and gloomy due to with abundant supplies, weak demand and a recession induced by the September plane attacks in New York and outside Washington.
December cotton went up 0.34 cent to finish at 28.86 cents a lb, ranging from 29.10 to a new contract low of 28.20 cents. On Thursday, the contract ended at 28.52 cents in the lowest close for cotton on a spot continuation basis since 1972.
March fell to a new low of 29.86 cents before ending at 30.55 cents, up 0.33 cent.
Back months put in a mixed performance, ranging from 0.25 cent firmer to 0.25 cent easier.
Follow-through pressure forced cotton down to new contract lows at the start where the market finally bounced due to trade and option buying by locals, brokers said.
We couldn’t force the 28.20 (cents) area (in the March contract), so we snapped back a little bit, said Brown.
The ring locals were easily the best buyers on the way up, finding only moderate scale-up selling for resistance, added Mike Stevens of Swiss Financial Services in Mandeville, Louisiana.
Speculative pressure reemerged at the highs to cap the very modest advance, floor brokers said.
Analysts said cotton prices must hold support at 28, 27.80 and possibly 26 cents. Below that, cotton futures may visit the 22-cents area, a level it last saw in 1966. The next mark would be 11 cents, an area last posted in the 1960s, they added.
Technicians said near-term resistance would now be at 29.50 and 30 cents.
In other news, the Cotlook A Index used by the trade as an indicator of global cotton demand fell anew by 0.45 cent to 35.05 cents.
Floor dealers estimated final volume traded at some 9,500 lots, against the previous tally of 6,839 lots.—Reuters