New York cotton futures lower

Cotton futures ended lower Friday on steady speculative sales, with more liquidation by investment funds and weakness in other commodity markets seen pushing fibre contracts lower next week, analysts said.
The New York Board of Trade's July cotton contract fell 0.66 cent to settle at 49.36 cents a lb, moving from 49.55 and a new lifetime low of 48.95 cents. New-crop December lost 0.64 to 54.11 cents, having also touched a contract low of 53.70 cents. The rest declined from 0.25 to 0.60 cent.
"There's no way to paint a pretty picture of something so ugly," said Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana.
He said the close below a technically key area of support at 50.08 cents in July delivery meant cotton will stay on the defensive next week, and the contract could approach the recent low around 48.30 cents.
"As good as cotton looked going home last Friday, that is how poor it looks today. As I have mentioned in the past, anytime a market makes a new high or new low (close), it is at its most vulnerable and that statement certainly applies to the July (contract)," Sharon Johnson, cotton expert for First Capitol Group in Atlanta, stated in a report.
"If additional weakness continues, the 'line in the sand' should be drawn at the lows made by the May contract at 48.30 and 48.65 (cents) this month and last," she added.
Speculative sales came in a steady clip in the market despite some scale-down trade buying, dealers said.
Cotton tumbled even though demand going into the 2006/07 marketing year (August/July) is robust, with top consumer China tipped to import a record 20 million (480-lb) bales.
The market will also be monitoring growing weather in the US cotton belt since many areas of the Southwest, especially the top growing state of Texas, have been hit by a severe dry spell during the spring planting season.
Brokers Flanagan Trading Corp put support in the July cotton contract at 48.80 and 48.10 cents, with resistance at 49.60 and 50.10 cents. Floor dealers said final trading volume was estimated at 19,000 lots, down from Thursday's count of 21,979 lots. Open interest was unchanged at 173,179 contracts as of May 18.