New York cotton shade down, but above session lows

Cotton futures settled softer Wednesday on trade sales but those losses were pruned by a bout of fund buying, with brokers saying the market seems poised to grind higher into 2005. The New York Board of Trade's March cotton contract slipped 0.19 cent to finish at 44.01 cents a lb, ranging from 43.65 to 44.58 cents. May lost 0.28 cent to 44.38 cents. Losses in distant months reached from 0.28 to 0.35 cent.
"We just can't seem to keep March down," said Sharon Johnson, cotton expert for Frank Schneider and Co Inc in Atlanta, Georgia.
Trade sales deflated fibre contracts, but fund buying stopped the fall and led the market back, she said.
Analysts added most players are reluctant to press the market hard going into the New Year holiday and that most of the activity involved players tweaking their positions going into 2005.
The market is shut Friday to observe the New Year holiday which falls on Saturday. Trading resumes on Monday.
"There is really no incentive to stick one's neck out in this market," one said.
Fundamentally, the market is still facing record crops in both the United States and China.
But Johnson said the market may soon have to acknowledge that cotton demand is good, and there are expectations of increased Chinese purchases in the first quarter of next year.
Looking toward the US Department of Agriculture's weekly export sales report, cotton brokers said they feel US cotton sales will range between 200,000 and 230,000 running bales (RBs, 500-lbs each), versus last week's 222,800 RBs.
US cotton shipments of previously booked orders are seen hitting from 180,000 to 230,000 RBs, from 251,500 RBs in last week's USDA data. The USDA report is due out at 8:30 am EST (1330 GMT) on Thursday.
Brokers Flanagan Trading Corp forecast resistance in the March cotton contract at 44.75 cents and 45.30 cents, with support at 44 cents and 43.40 cents.
Floor dealers said estimated final volume stood at 13,000 lots, versus Tuesday's 14,855 lots. Open interest in the cotton market slumped 2,191 lots to 83,450 lots as of December 28.