Cotton futures finished easier on Tuesday on investor sales but the market is range-bound should stay in a band for now, brokers said. The key December cotton contract slid 1.20 cents to finish at 71.58 cents per lb, dealing from 71.51 to 73.14 cents.
Volume traded in the December contract stood at 9,678 lots at 2:45 pm EDT (1845 GMT). "We're just chopping back and forth," said Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana. * "It will take something to take it out (of its trading range). And so far, it hasn't found that yet," he added.
Analysts said cotton prices are spanning a band running from 761 to 75 cents, basis December. Stevens said the contract seems to run out of gas every time it hits 73 cents, but then runs into commercial support around the 72 cents region. Stevens added that for small investors, a market that does not stray from its trading range of 71 to 75 cents is ideal. "The locals are just having a field day," he said.
Fundamentally, the trade is monitoring growing conditions in the US cotton belt and in places like top consumer China and India. A steady barrage of investor sales kept cotton contracts on the defensive, but trade and suspected mill fixation buying would step into pare market losses, traders said.
The trade will soon be turning its attention to the August monthly supply/demand report from the US Agriculture Department for the first detailed forecasts in the 2008/ 2009 marketing year (August/July). For now, forecaster DTN Meteorlogix said Texas, the top cotton growing state in the country, will be mostly dry through Saturday.
Brokers Flanagan Trading Corp sees support in the December contract at 70.50 and 69.80 cents, with resistance at 71.65 and 72.50 cents. Volume traded Monday hit 7,763 lots, exchange data showed. Open interest rose 659 lots to 220,054 lots as of July 21, exchange data showed.
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