New York cotton futures climb

Cotton futures finished sharply higher on Wednesday, driven up late in the session when a dive below key support to lows dating back a year sparked new buying interest, brokers said. The key December cotton contract closed a steep 0.91 cent higher at 68.10 cents per lb. The contract breached support around 67.0 cents, which held three days in a row, for a dip down to an 11-1/2 month low at 66.79 cents.
But buyers quickly came in to snatch cotton up at the low, sending prices to the session high at 68.48 cents. After hours, cotton steadied around 1.77 percent higher at 68.38 cents, a 1.19 cent gain. Volume traded in the December contract hit 9,964 lots by 2:57 pm EDT (1857 GMT). Another break below 67 cents was seen leading to a low around 65.50 cents.
But the close above Tuesday's high in an outside range, meaning a lower low and a higher high, points to more upside for cotton - Mike Stevens of Swiss Financial Services in Mandeville, Louisiana. Other analysts said they thought cotton prices had fallen far enough to draw in purchases by cotton merchants. Local newspapers reported some cotton crop damage in northern Texas from recent hail and rain storms, helping lift prices.
Analysts forecast another robust US export sales figure in the USDA's weekly report due Thursday at 8:30 am. Many analysts see cotton prices moving higher in the long-term given that plantings and output in most producing countries are expected to fall sharply this season.
Lower crops should lead to stock drawdowns, helping to push prices higher in coming months. World 2008/09 cotton ending stocks are seen dropping sharply to 50.98 million bales, from 53.24 million, according to the US Agriculture Department's monthly supply/ demand report.
Brokers Flanagan Trading Corp pegged support in the December contract at 66.60 and 65.65 cents, with resistance at 68.50 and 69.30 cents. Tuesday's volume slipped to 9,860 lots from 11,145 lots on Monday, exchange data show. Open interest in the cotton market declined by 2,705 lots to 213,927 contracts open as of August 19, exchange data showed.