US cotton futures extended the previous day's losses and ended at a 2-week low on Tuesday on some light speculative sales as brokers noted most market participants were likely to pull back business ahead of the USDA's monthly supply/demand report due out on Friday.
"This is such an important report coming out Friday morning that everybody may choose to keep their powder dry and not do anything that they don't have to do," said one cotton broker.
The New York Board of Trade's December cotton contract fell 0.11 cent to close at 51.14 cents a lb, its lowest settlement since July 21. Trading ranged 51.00 to 51.45. March eased 0.03 to 53.25 cents, while deferred months finished flat to up 0.05 cent.
Dealers noted the market's inability to breach support at 51.00 cents looked somewhat supportive.
"We have not been able to go down there and test it and then move away from it but we're sure not taking it out either," said one.
Cotton futures followed their opening call of 0.10 cent lower and continued to lose ground throughout the day on continued options-related sales and some scattered speculative selling pressured prices, although scale-up trade buying supported the market at the lows.
"We've done less volume today than we did yesterday and we've had a smaller trading range, so we may just be held in this recent range until the report," said one floor dealer.
Final estimated volume came to 6,250 lots, compared with 6,820 lots on Monday. Open interest in the market grew 283 lots to 94,335 lots as of August 8.
The market's attention continues to be squarely fixed on Friday's monthly US Department of Agriculture supply/demand report, which will give an indication of how demand is looking in the first part of the 2005/06 marketing year (August/July).
Most analysts said the focus of the USDA report will be on the size of the US cotton crop and what kind of demand will likely emerge from China, the world's leading consumer of cotton.
In other news, the New York Board of Trade cotton spec/hedge report showed speculators were 4.8 percent net long for the week ended August 5, versus 5.8 percent net long the previous week.
On the weather front, forecasters Meteorlogix forecast mostly dry conditions in the US Southwest and in Texas, with the possibility of a late day thundershower Thursday through Saturday.
They expect to see some scattered showers and thundershowers in the US Mississippi delta.
Flanagan Trading saw resistance in the December contract at 51.85 and 52.35 cents, while support was pegged at 51.05 and then at 50.40 cents.
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