Cotton futures settled higher on Monday on investor buying in very thin dealings, with analysts saying a lack of interest and lack of market-moving news may keep trading in fibre contracts quiet this week. The key December cotton contract on ICE Futures US rose 0.60 cent to close at $1.0492 per lb, trading from $1.035 to $1.0578.
It was an inside day for the second session in a row because the range was within Friday's $1.0215 to $1.0488 band. The Friday range in turn was within Thursday's $1.0174 to $1.0639 band.
Total volume traded was a little over 4,500 lots, preliminary Thomson Reuters data showed. That would put it on track as the lowest traded daily volume in over 20 months, according to ICE Futures US data. "We've got one of the slowest days in the last two years," said independent cotton analyst Mike Stevens. He said stronger corn and soybean prices kept investors glued to the grains complex and led to a lack of interest in cotton.
Traders said the December contract seems pinned between the psychological $1 mark to around $1.0416, the area of support where it broke down last week. Traders are mulling how damage was inflicted by Hurricane Irene on the US cotton crop in Virginia, North and South Carolina. Rains falling on open cotton bolls would badly hurt cotton quality.
The US Agriculture Department's weekly crop progress report on Monday showed 40 percent of North Carolina's cotton bolls were open during the week ended August 28. It was 11 percent in South Carolina and 8 percent for Virginia. The storm hit those states on August 28. Traders said market participants will then await 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 146,987 lots as of August 26, according to exchange data. Total volume traded Friday hit 8,194 lots, over half below the prior tally of 16,655 lots, ICE Futures US data showed.