New York cotton ends at 1-month low

NYBOT cotton futures closed Thursday at a one-month low on speculative and options-related sales, with players ignoring news of heavy damage by Hurricane Ivan to cotton farms in Alabama, analysts said.
Key December cotton dropped 2.61 cents to conclude at 47.58 cents a lb, dealing between 47.55 to 49.80 cents. It was the lowest close for the contract since settling at 47.32 cents on August 17, 2004.
March sank 2.45 cents to 49.09 cents. Back months retreated 2.25 cents to 2.78 cents.
"It appeared to be specs hitting (automatic) sell stops and options sales," said Sharon Johnson, cotton expert for Frank Schneider and Co. Inc. in Atlanta.
Market fundamentals are seen as bearish given a record crop in the US and large crops in countries like China, the world's top producer of cotton.
Futures tumbled from the opening bell as merchant sales in the options ring spilled over into the futures pit, with speculators piling into depressed fibre contracts, brokers said.
"The specs kicked off stops and bearish strategies were implemented in the options ring," one said.
The market gave little attention to Hurricane Ivan as it crashed into Alabama.
William Birdsong, an agronomist specialising in cotton with the Alabama Co-operative Extension system, said Ivan could cut the state's cotton crop by up to half or even more.
Alabama sowed 630,000 acres to cotton in 2004 and this would produce about 750,000 to 1.0 million (480-lb) bales of cotton. But Alabama is not a major cotton producer, especially when compared with Texas, which typically plants 6.0 million acres to cotton.
Johnson said cotton supplies are plentiful, especially since the US Department of Agriculture haw projected a record US cotton crop this season of 20.9 million bales.
Traders said the weekly USDA export sales report also had little impact in the market. USDA said US net upland cotton sales stood at 37,800 running bales (RBs, 500-lbs each), below trade belief that they would range from 50,000 to 100,000 RBs. Last week, sales hit 90,500 RBs.
Technicians said support in the December cotton contract would be at 47.32 and 47 cents, with resistance at 47.75 and 48.30 cents.
Floor dealers pegged estimated final volume at 13,000 lots, up from Wednesday's 4,592 lots. Open interest in the cotton market rose 31 lots to 67,550 lots as of September 15.