Cotton futures finished lower Thursday on investor sales sparked in part by a strong dollar as the market pulled back from a 21-month high hit in the previous session, brokers said. The benchmark March cotton contract went down 0.51 cent to finish at 75.74 cents per lb, dealing between 75.01 and 76.17 cents. It was an inside day since the range was within Wednesday's band of 74.89 to 76.58 cents.
The Wednesday close of 76.25 cents was the highest finish for cotton based on the spot daily charts since the end of February 2008. Volume traded in the March contract hit 10,093 lots at 2:36 pm EST (1936 GMT). The dollar hit a 3-1/2-month peak against the euro and this prompted broad-based selling across the commodity complex.
"Everything is on the dollar," said Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana. "All we did in cotton was back up a bit." Analysts said the downturn quickly uncovered commercial interest in the market when it hit the lows for the session. Stevens said that "when the market got to the lows, a lot of business got done."
Any sales would likely be reflected when the next government export sales report is handed out. The US Agriculture Department's weekly export sales report showed total US cotton sales at 242,300 running bales (RBs, 500-lbs each), against trade belief it would reach between 250,000 to 300,000 RBs. Sales last week stood at 289,100 RBs. US cotton export shipments reached 163,900 RBs, versus shipments last week of 122,400 RBs.
Brokers Flanagan Trading Corp sees resistance in the March cotton contract at 77 and 78.20 cents, with support pegged at 75.50 and 74.05 cents. Total volume traded Wednesday hit 13,342 lots, against the previous 15,069 lots, according to data from ICE Futures US Open interest in the cotton market stood at 186,554 lots as of December 16, from the prior count of 184,632 lots, the exchange said.
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