Cotton futures settled lower on Thursday as weakness in equity and crude markets pressured fibre contracts, and the prospect of a poor US jobs report on Friday may lead to further losses, brokers said. The key May cotton contract fell 0.58 cent to finish at 41.38 cents per lb, trading from 41.17 to 42.59 cents. July eased 0.69 cent to end at 42.54 cents.
Volume traded in the May contract was at 5,249 lots at 2:32 pm EST (1932 GMT). "It looks like cotton is tied to the hip to the equity markets," said Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia. The market has been rocked this week, starting with the huge losses at insurer AIG and then looking at the prospect of another poor US jobs report on Friday.
On Thursday, all-around investor sales hit cotton because of weakness in stocks, the robust dollar and weak crude prices. "Youre looking at an economy that is telling you that cotton demand may not be there to support the market," a dealer said. The worries over demand was seemingly underscored by the latest weekly export sales report from the US Agriculture Department.
USDA said total US cotton sales reached 253,500 running bales (RBs, 500-lbs each), from 592,300 RBs in last weeks report. The trade had been expecting sales to range from 250,000 to 400,000 RBs. US cotton shipments increased to 253,300 RBs, from 153,500 RBs last week, and trade belief it would run from 150,000 to 200,000 RBs.
Brokers Flanagan Trading Corp sees support in the May contract at 40.90 and 39.40 cents, with resistance pegged at 41.85 and 42.75 cents. Volume traded Wednesday reached 10,328 lots, exchange data showed. Open interest in the cotton market was at 116,028 lots as of March 4, from the prior tally of 116,082 lots, it said.
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