Cotton futures closed lower Tuesday on modest trade and speculative sales and the market could well drift into the Christmas and New Year holidays, brokers said.
The cotton market will be closing early on Friday, at 1 pm EST (1800 GMT) instead of the usual time of 2:15 pm. The market will also be shut next Monday in observance of Christmas.
The New York Board of Trade's key March cotton contract slipped 0.41 cent to end at 53.22 cents a lb, trapped in a tight band from 53.10 to 53.50 cents. May declined 0.37 cent to 54.20 cents. One contract aside, the rest lost from 0.15 to 0.40 cent.
Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana, said cotton may trade quietly up to the end of the week but that it may be vulnerable to sudden sharp movements.
"The thinness (in the volume) can be a two-way sword," he said, adding cotton could suddenly behave violently since the amount traded is so light and can easily sway futures.
Cotton contracts lost ground at the opening bell to quickly reach its lowest level for the day but recovered on speculative buying to briefly touch 53.50 cents, basis the benchmark March contract, dealers said.
"You have (automatic computer generated) buy-stop orders above 53.50 in March, but there's a huge amount of trade selling from producers trying to get the huge US crop through the system," one said. "It's been a real slow grind once we got off the mat at the lows of the day."
Traders said the market would look toward release of the weekly US Department of Agriculture export sales report on Thursday to further gauge the level of demand for cotton, especially from top consumer China.
Broker Flanagan Trading Corp sees resistance in the March contract at 54.05 and 54.65 cents, with support at 53.20 and 52.45 cents.
Floor dealers said estimated final volume amounted to 6,000 lots, from the prior tally of 5,350 lots. Open interest rose 255 lots to 101,154 contracts as of December 19.
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