Cotton futures finished lower Tuesday on sales by small speculators, with brokers saying the lack of leads may cause the market to gradually drift lower in the days ahead. ICE Futures' open-outcry March cotton contract shed 0.06 cent to close at 68.24 cents per lb, moving from 67.85 to 68.80 cents.
May cotton eased 0.10 to 70.06 cents and the new-crop December cotton contract fell 0.09 to 76.51 cents. ICE March electronic cotton futures lost 0.13 cent to 68.17 cents at 3:12 pm EST (2012 GMT), moving from 67.87 to 68.89 cents. Frank Weathersby, an analyst for brokers Affinity Trading in Fort Walton Beach, Florida, said unless news emerges of possible major purchases by China, "we don't see very much support for the market."
Most of the trade believes that China, the world's biggest consumer of cotton, should pick up the pace of its purchases ahead of the Lunar New Year in early February.
"Bigger mills in China will increase buying given how low their cotton stocks are, but smaller mills will close early and extend their holiday closures from the typical 10 days to 20 days," said a report by Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia.
With that in mind, the market is looking toward release of the US Agriculture Department's weekly export sales report which it feels should show sizeable cotton purchases by China.
Traders said that once the US Federal Reserve hands down its verdict on US interest rates this week, the focus of the market will turn to the industry group National Cotton Council's annual potential plantings survey of US cotton sowings for 2008 due to be released at the end of next week.
Brokers Flanagan Trading Corp see resistance in the March open-outcry cotton contract at 68.60 and 69.30 cents, with support at 67.75 and 66.50 cents. Open-outcry volume Monday was at 2,064 lots and screen business was at 17,211 lots. Open interest in the cotton market rose 3,165 lots to 266,689 lots as of January 28, exchange data showed.
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