Cotton futures settled with slight losses Tuesday in thin dealings as players struggled for leads while fretting if demand can recover from a recession that has decimated fibre consumption, brokers said. The key May cotton contract shed 0.13 cent to finish at 43.78 cents per lb, trading from 43.53 to 44.28 cents. Volume in the May contract was at 3,170 lots at 1942 GMT.
"What we are looking for are signs that the economy is bottoming out," said Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana. He said it would not take much to spark cotton futures, but there has been no spark so far and the volume traded has been exceedingly light. The overhanging factor is the global recession.
"The ongoing financial crisis reminds (one) of the little boy sticking his finger in a hole in the dike. As soon as one hole is stopped, another develops," said a report by First Capitol Group cotton expert Sharon Johnson. The question is whether governments can act quickly "to stem the overwhelming bad news from banks to consumers to government balance sheets," she said.
An ongoing indicator of demand will be the weekly US Agriculture Department's export sales report being handed out on Thursday. Brokers said sales should reach a sizeable level, but there are questions whether total sales last week of 441,300 running bales (RBs, 500-lbs each) can be reached at all.
Going forward, the trade will be looking for leads from the annual world agricultural outlook board meeting of the US Agriculture Department getting started on Thursday. Brokers see resistance in the May contract at 44.75 and 45 cents, with support at 43.50 and 43 cents. Volume traded Monday reached 7,224 lots, exchange data showed. Open interest in the cotton market was at 115,066 lots as of February 23, it said.
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