Cotton futures closed softer Monday on late speculative sales in moderate business, with the market seen staying in a band until release of a government crop report later this week, analysts said. The New York Board of Trade's key May contract fell 0.79 cent to end at 50.44 cents a lb, dealing from 50.40 to 51.50 cents. July eased 0.72 to 51.75 cents. Except for one contract, the rest retreated 0.49 to 0.80 cent.
"It's sideways consolidation," said Frank Weathersby of brokerage Affinity Trading in Fort Walton Beach, Florida. He added speculative and other accounts were content to engage in seesaw trade for the most part during the session.
Brokers said a late flurry of speculative sales shoved cotton futures down to their lows late in the session. "The specs ran out late, but it was real quiet for a large part of the day," one said.
Cotton prices have staged an advance over the past few weeks, riding persistent consumer demand, a weak dollar, lower cotton plantings and an anticipated increase in cotton demand from an expanding global economy.
Higher crude prices should also give cotton a boost since it would increase the cost of producing synthetic fibre, which competes with cotton, the analysts said.
Market players are now looking toward the release on Thursday of the monthly supply/demand report from the US Department of Agriculture. Most analysts do not expect major changes in the report and are instead turning their focus to the annual USDA planting intentions data due out on March 31.
"We'll probably have some adjustments in the world figures from the USDA, but reports this late in 2004/05 (marketing year) often provide few surprises," one said.
Brokerage Flanagan Trading Corp said resistance in the May contract should be at 50.80 and 51.70 cents, with support at 50.20 and 49.60 cents.
Floor traders said final volume hit about 9,100 contracts, from the previous 5,645 lots. Open interest in the cotton market went up 1,014 contracts to 112,250 lots as of March 4.
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