Cotton prices ended Friday at a seven-week low due to speculative fund sales sparked by the credit crisis and worries over demand in a key government production report, and both factors are seen depressing the market into next week, brokers said.
The New York Board of Trade's key December cotton contract slid 1.18 cents to conclude at 61.24 cents per lb, trading from 60.82 to 62 cents. It was the lowest close for the contract since ending at 60.79 cents on June 25. March cotton fell 1.35 cents to 64.40 cents. The rest retreated 0.90 to 1.25 cents.
The IntercontinentalExchange NYBOT electronic cotton market saw the December cotton contract fall 1.09 cents to 61.33 cents at 2:30 pm EDT (1830 GMT), moving from 60.81 to 62.95 cents.
"I would assume we're under pressure (into next week) unless some buying comes into say otherwise," said Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia.
She said the monthly supply/demand report of the US Agriculture Department, the first of the 2007/08 marketing year (August/July), raised some concerns after it sliced the estimate for China's cotton imports to 16 million (480-lb) bales from 16.5 million in last month's report. But Johnson said the main factor appears to be the sub-prime credit crisis roiling global financial markets.
Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana, said players will likely be "trading their fears" about the world economy and how a downturn may hit cotton demand going forward.
Speculative and fund sales hit the market early, but after the market staged a brief recovery, another wave of selling struck going into the close of business, dealers said. Brokers Flanagan Trading Corp sees support in the December cotton contract at 60.50 and 59.80 cents, with resistance at 61.30 and 62 cents.
Open-outcry volume stood on Thursday at 11,013 lots while screen business reached 20,969 lots. Open interest in the cotton market was at 213,840 lots as of August 9, down 1,664 lots from the previous session.
Comments
Comments are closed.