Cotton futures crumbled from investor liquidation to close lower Wednesday as the market stumbled after failing to sustain an advance beyond the upper end of its trading band, brokers said. The key May cotton contract dove 1.31 cents to end at 80.98 cents a lb, trading from 80.56 to 82.35 cents.
Volume in the May contract hit 9,743 lots at 2:50 pm EDT (1850 GMT). July cotton lost 1.17 cents to finish at 82.19 cents and new-crop December shed 0.30 cent to close at 75.69 cents. Jobe Moss, an analyst for brokers and merchants MCM Inc in Lubbock, Texas, said cotton proceeded to tank when the key May contract "could not get anything going over 83 (cents)."
The market also ran into some pressure from switch trade as players moved their positions out of the spot May and into the July and December contracts. Moss said the market, which had been steadily climbing the past few sessions, "reversed when the front end (May contract) fell off," with the widening spread between July and December contributing to the downward spiral in cotton futures. The market will soon turn its attention to the US Agriculture Department's monthly supply/demand report due out on Friday although only small changes are expected by the market.
Separately, the market is looking toward release of the USDA's weekly export sales data. Cotton brokers expect total US cotton sales to range from 200,000 to 300,000 running bales (RBs, 500-lbs each), from 279,000 RBs in last week's report. Brokers Flanagan Trading Corp sees resistance in the May contract at 81.40 and 82.65 cents, with support at 80.35 and 79.50 cents. Volume traded Tuesday reached 20,984 lots, against the previous tally of 17,643 lots, according to ICE Futures US Open interest in the cotton market was at 201,581 lots as of April 6, from the previous 198,221 lots, the exchange said.
Comments
Comments are closed.