Cotton futures closed lower on Tuesday on investor sales as technical pressure and possible harvest pressure depressed fibre contracts, with brokers saying the next move will depend on outside markets and the dollar. The December cotton contract declined 1.45 cents to finish at 61.45 cents per lb, trading from 61.17 to 63.35 cents.
December contract volume reached 8,786 lots at 2:39 pm EDT (1839 GMT). March cotton fell 1.41 cents to end at 63.59 cents, dealing from 63.25 to 65.50 cents. "It's harvest pressure and there's nothing bullish for cotton except the dollar," said Frank Weathersby, an analyst for brokers Affinity Trading in Fort Walton Beach, Florida, who added the only time cotton has pushed higher was on a weaker dollar.
Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana, said the technically motivated pressure in cotton "probably hit some (automatic) sell (order) stops." He said the cotton market appears tilted to "heavily favour a corrective dip back towards major retracement support between 62 and 60 (cents, basis December)."
Analysts said fibre contracts will depend for direction on the gyrations of the dollar and the performance of outside markets like global stocks and crude. "It can be up one day and down the next. There is just nothing there to point it one way or the other," one said. The analysts said the focus of the trade should soon turn to the upcoming US Agriculture Department monthly supply/demand report due out next Friday, October 9.
Brokers Flanagan Trading Corp sees support in the December cotton contract at 61.25 and 60.30 cents, with resistance at 62.60 and 63.05 cents. Total cotton volume Monday was 6,758 lots, from the prior tally of 19,632 lots, ICE Futures US said. Open interest in the cotton market reached 149,200 lots as of September 28, from the previous count of 148,161 lots, the exchange said.
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