Cotton futures settled easier Monday on speculative liquidation as the market struggled for direction given the dearth of fresh leads in the pit, brokers said.
New York Board of Trade's December cotton contract eased 0.42 cent to finish at 55.18 cents per lb, trading from 54.80 to 55.75 cents. March shed 0.08 to 58.90 cents. Except for three contracts, the rest were flat.
Keith Brown, president of commodity trading firm Keith Brown and Co in Moultrie, Georgia, said futures had edged up on technical buying and some premium covering caused by uncertainty over the direction of tropical storm Ernesto.
But the National Hurricane Centre said Ernesto will only menace Florida and seems poised to head out into the Atlantic Ocean later in the week, giving US cotton farms a miss.
Fundamentally, analysts are still pondering if drought and poor growing weather in the US and China will severely dent output. The trade is also wondering if demand will remain strong in the 2006/07 marketing year (August/July) or the strain of high crude prices depresses economic growth in many trading countries.
Fibre contracts edged up on follow-through buying at the start to reach its highest level for the day, but then gradually lost ground from speculative liquidation in the market, dealers said.
Brown said the market may well trade in a band until it can get a better handle on the global supply/demand equation when the US Agriculture Department's monthly supply/demand report is handed out on September 12.
"Everybody knows the US crop is in bad shape so I don't think the (weekly USDA) crop data will excite anybody at this time. We need to see how demand stacks up and we'll only get an idea when the supply report gets out," one analyst explained.
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 9,000 lots, down from Friday's 7,910 lots. Open interest rose 365 lots to 169,734 lots as of August 25.
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