Cotton futures finished softer on Tuesday on speculative liquidation as most players basically ignored a government crop report that came in within trade expectatibrokers said. ICE Futures open-outcry March cotton contract slipped 0.57 cent to close at 64.13 cents per lb, trading from 64 to 64.55 cents.
May shed 0.39 to 65.92 cents. One contract aside, the rest lost 0.25 to 0.75 cent. The ICE March electronic cotton contract was down 0.57 cent as well to 64.13 cents at 3:04 pm EST (2004 GMT) with volume in the contract at 5,791 lots.
"We're straddling the fence," said Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana. He said cotton prices, basis key March, have bounced off the recent low of 63 cents, backed away from the high at 65 and are now pretty much in the middle of that band. "We're just down and going nowhere," Stevens concluded.
There was scant reaction to the monthly supply/demand report of the US Agriculture Department simply because there were no surprises in the data.
The USDA, as expected, raised its estimate of the US 2007/08 cotton crop to 18.99 million (480-lb) bales, versus trade belief it would range from 18.9 to 19.0 million bales. Last month, USDA pegged the US crop at 18.86 million bales.
The report cut Pakistan's cotton harvest and increased its estimate for India. "There was nothing there (in the report) that made anybody change their mind," said Stevens.
For now, analysts said the focus will turn to how much lower US cotton sowings will be in 2008 due to the strong performance of grains prices this year. US cotton plantings in 2007 were estimated by the USDA at 11.01 million acres, a figure representing an 18-year low. Brokers Flanagan Trading Corp see resistance in the March open-outcry cotton contract at 64.55 and 65.20 cents, with support at 63.70 and 62.85 cents.
Open-outcry cotton volume Monday was at 2,346 lots and screen trade at 14,279 lots. Open interest in the market fell 1,001 lots to 211,859 lots as of December 10, according to exchange data.
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