New York cotton closes lower

Cotton futures ended lower Tuesday on thin trade sales a day after the market rallied to eight-week highs, and market sources said a lack of drive from funds should keep trading steady in coming sessions.
The New York Board of Trade's December cotton contract shed 0.35 cent to close at 56.53 cents per lb, after trading from 56.30 to 56.75 cents. March lost 0.33 to 59.35 cents, and the rest were unchanged to 0.35 cent lower.
"The funds bought what they wanted to buy yesterday," said Sharon Johnson, senior cotton analyst at First Capitol Group in Atlanta. "The trades are selling scale-up with concerns about the crop size in the US"
On Monday, fund buying boosted the benchmark contract to highs last seen in mid-June, with trade selling at the top that continued in Tuesday's session, traders said.
Floor dealers said the market saw extremely light trading volume Tuesday, with the final estimated at 6,900 lots, down by more than half of Monday's 17,001-lot tally.
Johnson said she expects the coming sessions to stay quiet ahead of the US Department of Agriculture's monthly supply/demand report due out this Friday.
Dealers said they expect the August US production figures to be lower than July's global supply/demand projections, which forecast US cotton output for 2006/07 at 20.5 million (480-lb) bales.
Last year, output hit a record 23.89 million, but the US crop has continued to suffer from a sizzling heat wave across the cotton belt.
The market also took note of the US Agriculture Department's weekly export sales report for the week to July 27, which showed total US cotton sales at 113,800 running bales (RBs, 500-lbs each), up slightly from the previous week's 107,500 RBs.
US cotton shipments of previously booked orders hit a marketing year high of 598,800 RBs, from 463,000 RBs in last week's data. China was the top destination with shipments of 236,000 RBs.
Johnson said she sees resistance in the December contract at 57.75 and 58.10 cents, with support at 56.16 and 55.50 cents.
Open interest in the cotton market sank 166 lots to 163,124 lots as of August 7.