Cotton futures was hit by a fusillade of investment fund sales to finish lower on Monday and brokers said the weak tone may lead to further losses in the days ahead. The key December cotton contract slid 1.56 cents to finish at 72.03 cents per lb, dealing from 71.89 and 73.39 cents.
Volume traded in the December contract stood at 6,597 lots at 2:41 pm EDT (1841 GMT). "We're getting direction from other (weak) markets and not finding direction internally," said Frank Weathersby, an analyst for brokers Affinity Trading in Fort Walton Beach, Florida.
Cotton lost ground from the start and analysts said the close below the Tuesday low of 72.16 cents, basis December, does not augur well for the market. "It's discouraging. We think that holding on last Friday may allow us to rebuild, but you have a day like this when the outside markets suffer again and down we go," a dealer said.
Traders said the market will turn its attention to the US Agriculture Department's weekly crop progress report being released after the markets close on Monday. The weekly Nunn Cotton letter said: "The August 2007 low for the December 2008 contract is 66.40 (cents), and if December were to break the 70.60-70.85 area, that could be a target.
" It added that "cotton prices are not attractive to producers and inflationary pressures have yet to influence cotton like other commodities. Low cotton prices mean cotton is not profitable and won't be planted not only in the US, but other parts of the world (like Brazil, Australia, India, Africa)."
Brokers Flanagan Trading Corp sees support in the December contract at 71.65 and 70.50 cents, with resistance at 72.50 and 73.60 cents.Volume traded Friday hit 14,547 lots, exchange data showed. Open interest rose 402 lots to 221,859 lots as of July 11, exchange data showed.
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