New York cotton ends near eight-week low

Cotton futures were hammered by speculative liquidation after the holiday weekend to close Monday near an eight-week trough, and the weak technical outlook may see more losses in the days ahead, brokers said.
The cotton market was closed Good Friday. The New York Board of Trade's May cotton contract tumbled 1.10 cents to finish at 51.81 cents per lb, trading from 51.80 to 53.10 cents. Based on the spot daily charts, it was the lowest close for cotton since ending at 51.76 cents on February 14. July fell 1.00 to 53.55 cents. The rest lost from 0.65 to 0.83 cent.
The IntercontinentalExchange's NYBOT electronic market for cotton showed the May contract down 1.07 cents to 51.84 cents at 2:57 pm EDT (1857 GMT), moving from 53.18 to a new lifetime low of 51.80 cents. "It's a really bad looking technical picture," said Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana. "We're blowing (automatic sell order) stops in every month."
He said the "burdensome" level of cotton stocks is weighing heavily on fiber contracts. Open interest in the cotton market was at 230,946 lots as of April 5, which Stevens said is some 100,000 lots higher than at the same time last year. Cotton prices had been hovering in a band from 52.50 to 54.50 cents, basis the spot month, so when the market broke down, the automatic sell orders kicked in.
Analysts said it was hard to say where support would kick in, but recent lows just under 50 cents may be a good place to start. They added that consumer business may pick up at the current low levels so the market will be watching for that. Brokers Flanagan Trading Corp sees support in May cotton at 51.55 and 51.05 cents, with resistance at 52.10 and 52.80 cents.
Floor dealers said estimated final volume stood at 50,000 lots, from the prior open-outcry volume of 17,129 contracts. NYBOT said electronic trading volume Thursday was at 10,850 lots. Open interest in the cotton market was at 230,946 lots as of April 5, down 2,039 lots from the previous session.
Separately, dealers said little impact is expected from the monthly supply/demand report of the US Agriculture Department since no major changes are expected from the data.