Cotton futures closed softer on speculative sales and last-minute liquidation of positions in the spot contract before it goes into delivery later on Wednesday, brokers said. The ICE Futures' May cotton contract eased 0.01 cent to end at 70.79 cents per lb, trading from 69.60 to 71.56 cents.
The new-crop December cotton futures fell 0.46 to 82.57 cents, dealing from 81.94 to 83.30 cents. Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia, said modest speculative pressure nudged the market lower and that most investors wanted to see how much is delivered in the May contract first.
They also want to see the weekly US Agriculture Department's export sales data before making up their minds on where fibre contracts will go to next, she said. Open interest in the May cotton contract stood at 6,173 lots as of April 22, from 11,236 lots previously.
Analysts believe actual open interest in May has gone down a further 4,000 to 5,000 lots and the amount left to be delivered would be fairly small. Cotton brokers said they expect total US cotton sales in the weekly USDA export report to range from 150,000 to 250,000 running bales (RBs, 500-lbs each), from sales last week of 146,500 RBs.
The brokers said US cotton shipments should reach from 280,000 to 320,000 RBs, versus shipments in last week's data of 313,600 RBs. "The problem really is that the amount of cotton being shipped has not been outstanding and this may force the USDA to again reduce its estimate for US (cotton) exports in the next supply report (in May)," a dealer said.
With that in mind, dealers said the key July cotton contract may be pinned for now between 73 and 76 cents. Broker Flanagan Trading sees resistance in the July cotton contract at 75.75 and 76.85 cents, with support at 74.05 and 73.75 cents. The contract ended Wednesday at 74.08 cents. Total volume traded in the cotton market Tuesday was at 18,736 lots, with open interest in the market down 3,298 lots to 253,186 contracts as of April 22, exchange data showed.
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