New York cotton finishes at three-month high-Texglobe

NEW YORK (August 06 2010): Cotton futures finished Thursday at a 3-month peak on technically motivated investor buying, but analysts feel end-of-the-week profit-taking could temporarily blunt the advance on Friday. ICE Futures US benchmark December cotton contract increased 0.59 cent to end at 80.06 cents per lb. It was the highest settlement close for the second position cotton contract since May 5, according to Thomson Reuters data.

December traded from 79.01 to 81.78 cents. The spot October contract added 0.20 cent to finish at 84.20 cents. October enjoys a premium of 4.14 cents over December, down from the 4.53 cents in the previous session. Volume traded in the December contract reached 21,536 lots at 2:43 pm EDT (1843 GMT). "The market rose on technical factors. It's the break above 80 cents (basis December)," said Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana.Once December got above 80 cents, Stevens said, a "monstrous number" of automatic buy orders sparked the contract to its session high.

The market now has a chance at grinding higher with the close over 80 cents but investors could well opt to cash in their gains for the week, he added. Producer and trade accounts were lying in wait for the advance, selling heavily on almost every tick up, dealers said.

The rally was also inspired by wheat futures, which hit near 2-year highs due to a withering drought in Russia that caused it to temporarily halt grain exports. Another supportive factor for the market was tight deliverable supplies. US certified cotton stocks stood at 39,563 (480-lb) bales as of August 4, down from the previous 41,478 bales and the lowest since 2004.

Brokers Flanagan Trading Corp sees resistance in the December contract at 80.70 and 81.65 cents, with support pegged at 79.80 and 78.75 cents. Volume traded Wednesday hit 11,475 lots, compared with the previous tally of 14,586 lots, ICE Futures US data showed. Open interest in the No 2 cotton market was at 178,947 lots as of August 4, versus the prior session's 179,080 lots, the exchange said.