Cotton futures closed slightly lower Tuesday as investors steadily moved positions out of the spot December contract before it goes into delivery next week, brokers said.
The New York Board of Trade's key December cotton contract fell 0.61 cent to end at 50.28 cents a lb, moving from 50.26 to 51.05 cents. March eased 0.44 to 53.43 cents. The rest shed 0.25 to 0.35 cent.
"We're just rolling and preparing for (next) Tuesday's first notice day (on deliveries)," said Keith Brown, president of commodity trading firm Keith Brown and Co in Moultrie, Georgia.
Investors who do not want to take actual delivery of cotton are moving positions from the December contract to the other months on the board.
Open interest in December fell 3,649 contracts to 28,106 lots as of November 14 while interest in March increased 1,755 lots to 64,378 contracts. "Although sizeable, the number of Decembers to be closed out is very doable which may contribute to a sideways type movement this week and next," said Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia.
She said the lacklustre tone will also be abetted by the "similar nondescript price movement overseas and China in particular."
For now, players are keeping tabs on the harvest of the US cotton crop. Market participants are also looking at the kind of demand for cotton in the 2005/06 marketing year (August/July), especially from top consumer China.
Futures edged higher at the start of trade to hit their session peak, but then came under steady pressure from investors getting rid of their positions in the market, dealers said.
Brokers Flanagan Trading Corp put resistance in December cotton at 50.50 and 51.30 cents, with support at 49.80 and 49.10 cents.
Floor dealers said estimated final volume amounted to 20,000 lots, down from the prior tally of 18,375 lots. Open interest fell 1,677 lots to 105,019 contracts as of November 14.
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