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NY cotton closes shade firmer, consolidating

NEW YORK: NYCE cotton futures ended Friday with minor gains due mainly to option-related buying as the market continued to consolidate after its sharp midweek rally.

"You had some option-related buying. It sort of backed and filled. It's still consolidating from Wednesday's limit up move," John Flanagan, president of cotton brokers Flanagan Trading Corp. in North Carolina, said.

May cotton went up 0.38 to settle at 61.06 cents a lb, trading 61.20-60.42 cents.

Wednesday, it had soared 2.98 to close at 61.51 cents a lb, just below the session peak and the three-cents limit up of 61.53 cents it touched during the session.

Spot March rose 0.40 to 59.05 cents. New crop December gained 0.18 to 62.13 cents.

Back months ranged from 0.34-0.10 cent steadier at the close.

Follow-through sales pressed cotton down at the start of business, but speculative interest and option activity gave cotton a lift in a fairly subdued session, brokers said.

The overall tone of the market, though, remained one of consolidation.

With world demand believed to be running strongly, any downswing in cotton would likely be limited, dealers said.

In industry news, the chief executive of top cotton merchant Dunavant Enterprises on Friday raised his estimate for US 2000 cotton sowings to 15.7 million acres from an earlier forecast last month of 15.4 million.

William Dunavant said at a ginners' meeting in Memphis that US cotton output should rise to 19.2 million (480-lb) bales. The USDA estimated US cotton production in 1999/2000 at 16.95 million bales.

Willard Sparks, chair of analytical firm Sparks Cos., told the same conference US cotton sowings should touch 15.4 million acres. He pegged US cotton output at 20 million (480-lb) bales.

On a technical basis, Flanagan said near-term resistance in May cotton would be at 62.25 cents. Support should be found at 60 cents, he added.

Estimated volume in the NYCE cotton market reached 7,000 lots, against the previous volume of 10,149 lots.

The NYCE is a subsidiary of the New York Board of Trade.-Reuters