Cotton futures settled lower Wednesday on late speculative sales and the market could trade in a band while waiting for fresh leads over the next few sessions, brokers said.
New York Board of Trade's December cotton contract eased 0.09 cent to conclude at 55.28 cents per lb, moving from 54.90 to 56 cents. March eased 0.01 to 58.49 cents. Except for one contract, the rest fell 0.10 to 0.20 cent.
"We're probably setting up a trading range," said Mike Stevens of brokers SFS Futures in Mandeville, Louisiana.
He said the range will be found between 54 and 57 cents for December delivery, and prices may have a "tough time" racing past the top end of the band right now.
Fundamentally, market participants continued to monitor the severe drought which has zapped large swathes of the US cotton belt and are mulling what kind of demand will emerge as the 2006/07 marketing year (August/July) gets under way.
Early trade and then speculative buying sparked the market to higher ground, but the advance sputtered at the top and the speculative accounts sold futures going into the close of trade, dealers said.
Looking toward the US Agriculture Department's weekly export sales report, cotton brokers said total US cotton sales will reach between 20,000 and 70,000 running bales (RBs, 500-lbs each), from 75,400 RBs in last week's report.
US cotton shipments of previously booked orders should hit 60,000 to 150,000 RBs, sharply down from last week's 535,200 RBs.
Sales and shipments are expected to be slow since the 2006/07 marketing year (August/July) is just getting under way and the US cotton crop is maturing at the moment.
Brokers Flanagan Trading Corp sees resistance in the December contract at 55.50 and 56.25 cents, with support at 54.75 and 54 cents. Floor sources said final estimated trading volume came to 7,000 lots, down from the previous 17,090 lots. Open interest rose 1,574 lots to 166,261 lots as of August 15.
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