Cotton futures settled easier on Tuesday on speculative profit-taking as the market pulled back from near 3-month highs, with players now bracing for release of a key government report on Wednesday, analysts said. The New York Board of Trade's March cotton contract slid 1.04 cents to close at 46.20 cents a lb, ranging from 45.86 cents to 47 cents. May lost 0.89 cent to 47.24 cents. Losses in distant months ranged from 0.69 cents to 1.60 cents.
"Money was taken off the table," said Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia. "We're certainly due for a break. We've been up five days in a row."
Cotton had risen on a steady barrage of fund buying despite bearish fundamentals. Analysts said the funds have decided in the annual reweighting of their indexes to plunk more funds into cotton and this accounted for its recent surge.
"We've been up so much, some guys felt it was time to cash in," a broker said.
The market is now waiting for release of the US Department of Agriculture's monthly production data Wednesday at 8:30 am EST (1330 GMT).
Most in the trade believe that, like all the reports since August, the data will be bearish for cotton.
Analysts said they feel the forecast for world cotton output may rise to near 115 million (480-lb) bales, from the 114.02 million bales pegged by the government last month.
The US cotton crop is seen climbing to 23 million bales, an all-time mark and slightly above the 22.82 million forecast by the USDA in its December data.
Brown said the interest would not be in the USDA figures, but in how the market reacts to another set of bearish numbers.
Brokers Flanagan Trading Corp said resistance in the March cotton contract was at 46.60 cents and 47.10 cents, with support at 46 cents and 45.30 cents.
Floor traders said final estimated volume was at 18,000 contracts, against Monday's 18,047 lots. Open interest in the market rose 2,829 lots to 90,689 lots as of January 10.
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