New York cotton extends losses

Cotton futures settled sharply lower Friday on speculative sales and switch trade as players got out of the spot contract since notices for deliveries will be reported starting next week, brokers said.
The New York Board of Trade's front July cotton contract sank the 3.00-cent limit to end at the new contract low of 46.12 cents per lb, with the session high at 49.25 cents.
The benchmark December contract fell 1.40 cents to 53.58 cents, dealing from 55.24 to a new contract low of 53.50 cents. One contract aside, the rest lost 0.60 to 0.90 cent.
Under exchange rules, cotton has a 3.00-cent limit move.
Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana, said the next move of the market will depend on what kind of deliveries are seen in July and the weather conditions over the weekend in the parched farms of places like Texas, the top growing state in the country.
"This rain will help where it hit, but as much as one half of the dryland crop has already been lost," said a daily commentary by brokers Flanagan Trading Corp. On switches, open interest in July dropped 8,126 to 13,339 lots as of June 22 while interest in December surged 5,458 to 116,236 lots.
As to the weather conditions in Texas, forecasters Meteorlogix said the state will be mostly dry but should get scattered rain through the weekend. Traders said early speculative sales dragged cotton down and smaller speculators tried to push the market into automatic sell order stops but that trade buying showed up and swiftly pared the market's losses.
"The locals kept leaning on its throughout the day, but there is really heavy trade support below. I think we eventually work our way up from here simply because demand is that good," one said. Flanagan Trading sees support in the December contract at 53.55 and 53 cents, with resistance at 54.75 and 55.10 cents. Floor dealers said estimated final volume reached 45,000 lots, versus the previous 47,014 lots. Open interest in the cotton market fell 561 to 164,680 contracts as of June 22.