Cotton futures settled lower on Tuesday on technically-inspired investor sales, but late short-covering pared the market's losses, brokers said. The December cotton contract in New York shed 0.92 cent to end at 58.15 cents per lb, moving from 58 to 59.61 cents. Volume in the December contract was at 7,711 lots at 2:33 pm EDT (1833 GMT).
March cotton fell 0.98 cent to finish at 60.59 cents. Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana, said investor pressure sought to shove cotton below a key area of support at 58 cents. "(But) every time we gone down, we've uncovered some business," he said. A close below 58 cents, basis December, would open the door to a probe of 56 cents.
Analysts said the selling pressure eased in the last few minutes of business, and this led to some short-covering that pruned losses in fibre contracts. "We couldn't get below 58 in December and it was getting late in the day so some folks covered going back. We'll try again tomorrow and see which way the funds are leaning," a dealer said. Going forward, the focus will be on China.
"China is the 1200 pound gorilla of fibre demand," said a report by Sharon Johnson, cotton expert for First Capitol Group in Atlanta. The outlook for demand will continue to depend on a great deal on its rapidly growing economy, she added.
Brokers Flanagan Trading Corp pegged resistance in the December contract at 58.75 and 59.60 cents, with support at 57.90 and 57 cents. Total cotton volume Monday reached 5,820 lots, from the previous 7,689 lots, exchange data showed. Open interest in the cotton market hit 126,580 lots as of August 24, from the previous 126,647 lots, ICE Futures US said.
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