Cotton futures ended higher on Tuesday on investor buying in light trade, with the slow pace of trade seen likely given the upcoming holiday weekend, analysts said. The cotton market is shut Monday for Labour Day. The key December cotton contract on ICE Futures US rose 0.50 cent to close at $1.0542 per lb, trading from $1.0364 to $1.07. The range was little changed from the trading band seen the last three sessions.
Total volume traded Monday stood at 5,502 lots, the lowest level traded since December 29, 2009, ICE Futures US data showed. The total traded Tuesday was around 8,000 lots, over a third below the 30-day average, preliminary Thomson Reuters data showed.
"The odds are we will be in this range for a while," said independent cotton analyst Mike Stevens. Traders said cotton futures climbed on likely end-of-the-month buying by small index funds or mill fixations in the market. They said the December contract seems pinned between the psychological $1 and $1.01 level to the recent top at $1.09.
Some support may also be coming from possible damage to cotton plants in Virginia, North and South Carolina. Rains falling on open cotton bolls would harm cotton quality. The US Agriculture Department's weekly crop progress report on Monday showed 40 percent of North Carolina's cotton bolls are open for the week ending August 28, and the figure for South Carolina is 11 percent and 8 percent for Virginia.
The storm hit those states on August 28. Traders said market players are now looking toward the release of next month's USDA monthly supply/demand report to get a better idea about world and US supply/demand conditions in the 2011/12 marketing year (August/July). The level of investor interest in the cotton market hit 146,908 lots as of August 29, according to exchange data.
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