Cotton futures settled lower Tuesday on investment fund liquidation as weakness in other markets depressed fibre contracts as well, brokers said. The benchmark December cotton contract slumped 2.09 cents to close at 62.30 cents per lb, trading from 62 to 64.25 cents.
March dropped 2.26 cents to 66.ember contract stood at 10,510 Leith Brown, president of commodity firm Keith Brown and on was pressured by the weakness caused by the dollar in the commodity complex. "It's more liquidation," he said, adding the glum mood dragged cotton lower as well. He said the direction of the market in the coming sessions "is a day-to-day assessment."
Weakness in the commodity sector tomorrow would spark more selling in cotton and the reverse would of course be true, Brown explained. Analysts are worried what the final shape of a $700 billion bank bailout rescue plan will be forged in Washington.
"At face value, expenditures of this size are inflationary in general and for commodities in particular and dramatically increase the federal deficit which in turn is negative to the US Dollar," a report by Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia, said.
"Into early 2009, cotton prices have to decide which fundamental is more important, another decline in cotton area and therefore smaller supply or falling consumption due to slower economic growth," she added. Fundamentally, nothing has changed in cotton as the market monitors the progress of the fall harvest.
The market will be looking for leads from the US Agriculture Department's weekly export sales report and then the next monthly supply/demand data from the US Agriculture Department. Brokers Flanagan Trading sees support in the December contract at 61 and 60.25 cents, with resistance at 62.90 and 63.75 cents. Volume traded in the cotton market Monday was 14,878 lots, exchange data showed. Open interest in the cotton market fell 1,564 lots to 206,335 contracts as of September 22, it added.
Comments
Comments are closed.