Cotton futures finished lower on Tuesday on speculative profit-taking and sales as the market appeared to take a break after rising steadily the past two weeks, although the overall tone remains bullish, brokers said.
The New York Board of Trade's July cotton contract declined 0.76 cent to conclude at 51.88 cents per lb, moving from 51.50 to 52.55 cents. New-crop December lost 0.71 to 57.29 cents, dealing 57.05 to 57.85 cents. Except for one contract, the rest slipped 0.45 to 0.58 cent.
Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia, said cotton prices still appear to be headed higher over the next few sessions.
"We needed to sit back a little bit. We just had to go through this little correction," she said, adding the market had "been up almost non-stop for two weeks."
Fibre contracts have posted gains due to worries over poor growing weather in key producers like China and the US while demand for cotton has stayed strong.
Futures lost ground at the start from speculative sales but trade buying emerged at the day's lows and served to pare market losses, dealers said.
Forecaster Meteorlogix said Texas, the biggest cotton growing state in the country, will stay dry and hot through Saturday with temperatures ranging from 65 to 105 degrees Fahrenheit (18 to 41 Celsius).
The market also saw some switch trade as players moved positions out of July before the delivery period begins in less than three weeks.
Open interest in the July contract fell 989 lots to 89,920 contracts as of June 5 while interest in December went up 1,082 contracts to 63,043 lots. July goes into delivery on June 26.
Brokers Flanagan Trading Corp sees support in the July contract at 51.65 and 50.80 cents, with resistance at 52.15 and 52.50 cents. Floor dealers estimated cotton volume at 23,000 lots, up from Monday's count of 20,720 lots. Open interest rose 1,222 lots to 178,675 contracts as of June 5.
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