NEW YORK (Dow Jones)--ICE Futures U.S. cotton snapped back into positive
territory Wednesday as the market consolidated from recent losses.
March cotton settled up 64 points at 73.43 cents a pound, and the May
contract settled 66 points higher at 74.62.
Analysts said cotton futures are likely to trade within a narrow technical
range in the near term as the market considers its next move. Traders use
technical charts that track market movement to mathematically plot price
direction.
Buying from textile mills at lows will likely prevent a sudden price drop if
futures probe the lower end of the range, said Sharon Johnson, senior cotton
analyst at First Capitol Group in Atlanta. Futures have technical support at 72
cents and 70 cents, Johnson said.
If cotton repeatedly holds lows, it will flash a bullish sign at traders that
could kick-start buying to push futures through resistance at 74 cents a pound
basis March, said Jack Scoville, vice president at Price Futures Group in
Chicago. Next resistance is at 77 cents a pound, he said.
Cotton futures are consolidating after hitting their highest prices in 16
months on Jan. 4. Cotton prices were supported by weaker-than-expected
production and ideas an economic recovery would support consumption.
ICE daily cotton stocks increased by 2,438 500-pound bales Tuesday to total
422,140 bales with 26,538 bales awaiting review and 1,936 decertification
orders, according to exchange data.
ICE cotton open interest the number of active positions left at the end of
the session--increased by 840 positions Tuesday to total 181,280, according to
the exchange.
Volume was estimated at 12,535 lots. In options, approximately 3,446 calls
and 1,506 puts traded, according to exchange data.
Close Change Range
Mar 73.43 +64 pts 72.45-73.99
May 74.62 +66 pts 73.61-75.10
Dec 74.60 + 8 pts 74.43-75.00