Cotton prices gain on short covering, rise in equities
July 29 (Reuters) -ICE cotton futures rose over 1% on Monday, supported by short covering as traders expanded their net short position towards the end of the month, while an upbeat sentiment in equities also helped.
* Cotton contracts for December CTZ4 rose 1 cent, or 1.47%, at 68.99 cents per lb at 11:44 a.m. EDT (1544 GMT).
* "The market is very oversold, managed money funds are nearly record short as of Friday, and we are coming into the end of the month, so we are seeing some squaring... this is probably just a technical bounce," said Keith Brown, principal at cotton broker Keith Brown and Co in Georgia.
* Cotton speculators increased their net short position by 6,751 contracts to 51,241 in the week to July 23.
* Supporting the natural fiber, global stocks broadly gained on Monday in a week packed with earnings and a trio of central bank meetings that could see the United States and UK open the door to interest rate cuts while Japan might lift borrowing costs in a step toward "normality". MKTS/GLOB
* In terms of the near-term outlook for cotton prices, the resistance level is at 70 cents with a potential downturn to as low as 64 cents, said Brown.
* Elsewhere, Chicago soybean and corn prices fell on Monday, as a forecast for rain in the U.S. crop belt alleviated concerns over the potential impact of crop yields from hot and dry weather.
* Last week, the U.S. Department of Agriculture report on Thursday showed export sales of 131,300 running bales of cotton, up 16% from the previous week but down 11% from the prior 4-week average. EXP/COT
Reporting by Anmol Choubey in Bengaluru; Editing by Tasim Zahid
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