Cotton futures ended fractionally higher on Tuesday in see-saw business as players adjusted positions ahead of the release of a vital government crop tomorrow, analysts said. The key December cotton contract on ICE Futures US rose 0.13 cent to end at $1.047 per lb, trading from $1.0269 to $1.04.
The market has traded in a rough band from 98 cents to $1.04 for the last 13 sessions. Total volume traded Monday hit almost 9,400 lots, about a quarter under the 30-day norm, preliminary Thomson Reuters data showed. Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia, said market expectations seem subdued when the US Agriculture Department releases its monthly supply/demand report at 8:30 a.m. EDT (1230 GMT) on Wednesday.
Technically, Brown said the December contract has enough momentum to "try $1.045 and maybe $1.05" in the days ahead. He expressed some doubt whether the cotton market would be able to grind much higher beyond those levels. Traders said they would be looking for confirmation that the USDA would gradually reduce its estimate for the US cotton crop in 2011/12 currently pegged at 16.56 million (480-lb) bales.
Most in the cotton trade expect a reduction after drought ravaged the crop in Texas, the top cotton growing area in the country, and in southern Georgia, the second biggest producing area of the US. Analysts said the main issue in the report would be the USDA estimate of cotton demand, especially after the poor macro economic outlook raised the prospect of a global recession.
Open interest in cotton, usually taken as an indicator of investor exposure in cotton, stood at 154,553 lots as of Oct 10, from 153,958 lots on Oct 7, the exchange said. Total volume traded Monday in the cotton market reached 10,878 lots, up from the 7,552 lots last Friday which was the lowest amount traded since Sept 16, ICE futures US data showed.
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