Cotton futures settled with modest declines on Friday, pulled down with other commodity markets as the dollar strengthened, but brokers said future supply concerns and recent strong price action should keep prices well supported. The key December cotton contract closed down 21 cents at 69.63 cents a lb. The contract set a range between 68.91 and 70.19 cents a lb, but held below the one-week high at 70.28 set Thursday.
After hours, cotton edged up 2 cent to 69.86 cents. December contract turnover was a light 5,393 lots by 2:59 p.m. EDT (1859 GMT). Dollar gains prompted some profit-taking selling across the commodity complex, including cotton, by short-term speculators - traders said. Cotton's rally off of an 11-1/2 month low at 66.79 a lb provided definitive near-term direction - traders said.
Physical buyers found value from that low up to current levels, and should continue to define support - traders. Prices may consolidate around current levels, and could build to even higher levels - brokers. "If cotton can break through that resistance, it could rally to challenge recent highs at 75 cents basis December." - John Flanagan of Flanagan Trading Corp.
Some analysts expect the cut in cotton plantings to keep a floor under prices over the long-term. Resulting declines in output in most producing countries should also offer price support, said analysts. Weather forecaster DTN Meteorlogix said it sees dry conditions or a few widely scattered showers In Texas cotton regions over the next five days.
Brokers Flanagan Trading Corp pegged support in the December contract at 69.30 and 68.50 cents, with resistance at 70.95 and 71.85 cents. Thursday's volume was heavy at 14,569 lots, exchange data show. Open interest in cotton futures rose by 2,549 lots to 215,359 open contracts as of August 21, after a session of heavy buying, exchange data show.
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