Cotton futures reeled from investment fund liquidation to end lower on Friday and analysts feel fibre contracts will probably see more gyrations in the market going into next week. The ICE Futures' May cotton contract shed 0.87 cent to close at 70.88 cents per lb, trading from 70.21 to 72.29 cents.
The new-crop December cotton futures fell 0.43 to 82.88 cents, dealing from 81.71 to 83.75 cents. Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia, said investment funds are running the market hard either end of the trading range without paying attention to market fundamentals. "They overdo it to the upside and reverse and then do it the other way," he said.
Cotton market players may take a moment to look at how much deliveries there will be in the May contract when notices are posted next week, traders said. On switches, open interest in the May cotton contract stood at 20,048 lots as of April 17, from 28,318 lots previously. Otherwise, Brown and other analysts said little heed is being paid to market fundamentals at the moment since most investment accounts are making trading decisions based on the way prices are behaving.
"If they hit those chart points, they just pile in. I think it may have to wait for a while before we look at fundamentals again," one said. The next major report the market will be looking at is the US Agriculture Department's monthly supply/demand report next month when the first projections for the 2008/09 marketing year (August/July) are handed out.
Then there will be the USDA's annual plantings report due out on June 30, the analysts said. Traders sees resistance in the May cotton contract at 71.20 and 72 cents, with support at 70.50 cents. Volume traded in the cotton market Thursday was at 27,052 lots, with open interest in the market down 2,193 lots to 259,348 contracts as of April 17, exchange data showed.
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