New York cotton lower, may slip further

Cotton futures settled easier on Thursday on mild profit-taking and speculative sales as the market experienced a pullback after rising steadily the past few sessions, dealers said.
The New York Board of Trade's December cotton contract fell 0.70 cent to conclude at 53.01 cents per lb, in a band from 52.90 to 53.50 cents. It was an inside day since the range was within Wednesday's 52.80 to 54.05 cents band.
March slid 0.73 to 56 cents. Distant months declined from 0.43 to 0.75 cent.
Jobe Moss, an analyst for brokers and merchants MCM Inc in Lubbock, Texas, said the market had risen the past three days and fell back due to a "little profit-taking and spec selling" and futures could slip further before the weekend.
Dealings were very modest though as cotton prices, basis the key December contract, were confined to a narrow range.
Fundamentally, most analysts believe prices will head higher longer-term as cotton crops in several key producers like the United States and China must contend with drought-like conditions.
In Texas, the leading US cotton grower, output is seen by most plunging to around 4.0 to 4.5 million (480-lb) bales in 2006/07 from around 8.0 million bales in 2005/06.
The only question hounding cotton is whether rampaging crude prices will put a serious dent on world consumption. Futures slipped at the start from speculative pressure, but quickly found support from trade accounts at the lows, dealers said.
"We tried to test yesterday's low and did not even get past that," one said.
In other news, the US Agriculture Department's weekly export sales report showed total US cotton sales at 81,300 running bales (RBs, 500-lbs each), down from 284,400 RBs in last week's report and trade belief it would range from 150,000 to 250,000 RBs.
US cotton shipments reached 362,600 RBs, from 394,500 RBs last week and trade expectations it would hit between 350,000 and 425,000 RBs. Broker Flanagan Trading Corp sees support in the December contract at 53 and 52.15 cents, with resistance at 53.55 and 54.75 cents.
Floor dealers said estimated final volume reached 5,000 lots, vs. the previous 12,721 lots. Open interest in the cotton market fell 464 lots to 161,113 lots as of July 12.