Cotton futures settled Friday at their lowest level in two months on follow-through investor sales but suspected consumer buying pared losses ahead of a holiday break, brokers said. The cotton market will be shut on Monday for Presidents Day. Trading resumes on Tuesday.
The key March cotton contract dropped 1.25 cents to end at 45.22 cents per lb, trading from 45.06 to 46.59 cents. It was the lowest close for cotton on a spot basis since early December 2008. Volume traded in the May contract was at 11,005 lots at 2:42 pm EST (1942 GMT). The spot March contract lost 1.00 cent to end at 44.03 cents. Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana, said while chart-based sales kept pressure on cotton, scale-down trade buying has been seen in the market.
"Business has been picking up the last three days," he said, adding the market will turn its attention to the release of a report by industry group National Cotton Council. The NCC will be releasing its annual potential cotton plantings survey later on Friday. Most in the trade expect US 2009 cotton plantings in the survey to range from around 8.3 million to 9.0 million acres, down from 9.4 million acres planted to cotton in 2008.
Stevens said most commercial accounts and merchants feel US 2009 cotton sowings will be bunched between 8.5 million and 9.0 million acres. They said the recent fall in soybean futures in Chicago below the $10/bushel mark meant most farmers will likely opt to stick with planting cotton this year. Johnson said the market should stabilise after several losing sessions and added that most players may wait for the release of the annual potential plantings survey by the industry group National Cotton Council.
Brokers believe support in the May cotton contract at 45 cents, with resistance pegged at 46 cents. Volume traded Thursday reached 34,521 lots, exchange data showed. Open interest in the cotton market was at 116,830 lots as of February 12, from 118,857 lots in the previous session, it said.
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