NY cotton ends higher but off session top

NEW YORK: Cotton futures closed higher Monday on follow-through speculative buying but trade sales in the options ring took the steam out of the market and knocked it back in late trade, analysts said.

The key December cotton contract on ICE Futures US rose 3.52 cents or by 3.5 percent to finish at $1.0404 per lb, trading from $1.0052 to the daily limit of $1.0552.

Total volume traded hit over 12,700 lots, about 8.5 percent under the 30-day norm, Reuters data said.

"It appears to be technical, follow-through buying from last week," said independent Louisiana-based analyst Mike Stevens.

A leading impetus for the advance in cotton futures came from stronger outside markets and the weaker dollar, he added.

Global shares climbed for the third day running as hopes of progress in Europe's debt crisis prompted investors to buy up assets cheapened by last week's rout.

Once trade sales capped the advance, the market sputtered and the key December cotton contract retreated from the daily limit high it posted during the session, dealers said.

The level of investor interest barely rose. Open interest in the cotton market was at 141,178 lots as of Aug. 12, from 140,442 lots as of Aug. 11 which is the lowest level in over two weeks, ICE Futures US data showed.

Analysts said the market will now turn its attention to the US Agriculture Department's weekly crop progress report due out later on Monday to gauge the condition of the crop, especially in the drought-hit state of Texas.

Total volume traded Friday hit 11,137 lots, the lowest level of business since July 28, ICE Futures US data showed.

Copyright Reuters, 2011