Cotton futures reeled from investment liquidation to end Friday at a 12-week low caused by falling outside market and the poor tone of fibre contract may lead to further losses next week, analysts said. The key March cotton contract fell 2.37 cents to conclude at 66.62 cents per lb, moving from 66.55 to 69.38 cents. It was the lowest finish for cotton since the middle of November when it was trading below 66.50 cents.
Since trading as high as 76.77 cents on January 4, 2010, the benchmark cotton contract hit a session low of 66.55 cents Friday. That represented a fall of 13.31 percent in value between January 4 and February 5. Volume traded in the March contract hit 24,345 lots at 2:38 pm EST (1938 GMT). "You look at the outside markets and it got ugly in a hurry. Cotton got caught up in the fray," said Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia.
Cotton tried to hang on but got pounded as it was finally overwhelmed by selling emanating from worries over the strong dollar and eurozone debt worries. "It was going to be a bad day. There's no way around it," said Johnson. Battling the selling spree all the way down were trade and possible mill fixation buying.
Analysts said that if outside markets stabilise over the weekend, cotton could turn around in a hurry. The market may also take a pause ahead of the US Agriculture Department's monthly supply/demand report due out on Tuesday. Brokers Flanagan Trading Corp sees resistance in the March contract at 66.70 and 67.80 cents, with support at 65.95 cents. Total volume traded Thursday hit 20,610 lots, against the previous 22,846 lots, according to data from ICE Futures US Open interest stood at 168,874 lots as of February 4, off from the prior count of 171,187 lots, the exchange said.
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