New York cotton closes easier

Cotton futures settled Thursday at a three-week low on speculative and options-linked selling as the market shrugged off news of large purchases by China of cotton, analysts said. The New York Board of Trade's July contract slid 0.63 cent to finish at 53.26 cents a lb, its lowest since mid-April while dealing from 52.60 to 54.40 cents. Spot May shed 0.40 to 54.60 cents. Distant months declined from 0.05 cent to 1.12 cents. Mike Stevens of SFS Futures in Mandeville, Louisiana, said a combination of speculative, fund and options-related sales helped "take prices into new low ground." The market gave short shrift to the weekly export sales report of the US Department of Agriculture outlining the massive buying by China of US cotton.
USDA's weekly export sales report said US upland cotton sales hit a marketing year high of 931,000 running bales (RBs, 500-lbs each). Of that total, China accounted for 664,800 RBs.
USDA said total US cotton sales hit 1,030,200 RBs, way above trade belief it would range from 200,000 to 500,000 RBs.
US cotton shipments of previously booked orders hit 300,000 RBs, from last week's 370,100 RBs.
Analysts said last week's rally in cotton to a 10-month high effectively priced in the Chinese purchases.
"The buying has already occurred as a result of the business," said Sharon Johnson, cotton expert for First Capitol in Atlanta, Georgia.
But once the market failed to generate any follow-through interest, cotton contracts began losing ground from speculative liquidation, profit-taking and options-related sales, the brokers said.
"We'll probably consolidate around these levels and then we'll take a look at new crop conditions in the next USDA report," one explained.
Brokers Flanagan Trading Corp said it sees support in the July cotton contract at 52.80 and 52.10 cents, with resistance at 53.55 and 54.20 cents.
Floor dealers said estimated volume stood at 13,000 lots, down from Wednesday's count of 36,996 lots. Open interest sank 7,070 lots to 111,624 contracts as of May 4.