* May open interest drops sharply
* Trade mulls if major firm got out of losing position
NEW YORK, April 23 (Reuters) – Cotton futures closed at a three-week high on Monday on investor buying on the likelihood of small deliveries in the spot May contract as it goes into first notice day at the close of business on Monday, analysts said.
The July cotton contract on the ICE Futures U.S. exchange rose 1.47 cents or by 1.6 percent to finish at 92.48 cents per lb, dealing from 90.51 to 92.84 cents. It was the loftiest close for the second position contract since April 3.
May’s open interest fell 2,930 lots to 1,608 lots as of last Friday, equivalent to 167,500 (480-lb) bales of cotton.
Traders believe the open interest will ease to around 500 to 1,000 lots, which would be equal to 52,083 to 104,166 bales, at Monday’s close when notices for deliveries are tallied.
Independent analyst Mike Stevens said cotton was boosted by technically inspired speculative buying and a test of the upper end of its trading band at 93 to 95 cents, basis July, seems in the offing.
On a benchmark basis, the cotton contract has remained trapped in a range between 87 and 94 cents since the start of March, Thomson Reuters data showed.
Ron Lawson, an analyst for brokerage logicadvisors.com in Sonoma, California, said cotton prices still need to attract acreage from the United States and other northern hemisphere farmers during spring planting season.
“Globally, this crop has got its work cut out for it,” said Lawson.
Monday’s estimated volume was near 19,200 lots, about a fifth under the 30-day norm, according to Thomson Reuters data.
Open interest amounted to 183,880 lots as of April 20, the lowest since March 15, ICE Futures U.S. exchange data showed.
(Reporting by Rene Pastor; Editing by Bob Burgdorfer)
