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NYCE cotton closes at seven-month high

NEW YORK: NYCE cotton futures settled modestly higher Friday as fund and speculative buying pushed it to a seven-month peak although profit-taking in front of a holiday weekend and local sales pared the market's rally.

March cotton edged up 0.37 to end at 55.12 cents a lb, moving from 55.85-54.65 cents. March touched a lifetime low of 48.60 cents just last month.

The contract's close was the highest since mid-June 1999 when benchmark cotton was hovering around 56 cents although it is still far from levels around 70 cents reached in 1998.

May cotton rose 0.30 to 56.25 cents. Back months were 0.42 cent firmer to unchanged, except for new crop December 2000 which slipped 0.01 to end at 59.49 cents.

"We continued to see the specs and the funds buy the market. But we got profit-taking ahead of the three-day weekend," Keith Brown, president of commodity trading firm Keith Brown and Co. in Multrie, Georgia, said.

The NYCE cotton market will be closed Monday in observance of the Martin Luther King holiday here. Trading will resume on Tuesday, January 18.

Cotton got off to a robust start as speculative funds pushed the market into higher territory, dealers said.

"The funds were buying it like crazy," one said.

Trade sales near the top of the range and speculative profit-taking stopped the market's advance for the meantime.

"We're probably close to some kind of top," said Brown.

Brokers said they feel March cotton may go through a brief pullback and then resume its charge to higher ground.

But most believe it would be difficult for the old crop March cotton contract to poke its nose beyond 56-57 cents.

"I don't think the old crop has enough power to get up to 60 cents. The new crop (December cotton contract) should get through 60 and maybe get up to 63-65 cents," a broker in Texas said.

Dealers pegged support in March cotton at 53.40 cents whilst resistance should be found at 56, 56.30 and all the way up to 56.75 cents.

The nine-day relative strength index (RSI) of March cotton remained in overbought ground as it stood at 82 at the close on Friday from 80 previously.

An RSI reading of 30 or less usually meant the market is oversold while one of 70 or higher is an indication the market is overbought on a short-term basis.

Volume reached an estimated 24,500 lots, against the previous volume of 11,941 lots.

In industry news, Indian Agriculture Secretary Bhaskar Barua said Friday that New Delhi has banned cotton imports from January 11 because of "phytosanitary considerations."

Trade sources in Karachi said Pakistan had already signed contracts to export up to 250,000 bales of cotton to India, of which 40,000 bales had already been shipped.-Reuters