Cotton futures settled lower Wednesday on sales by small investors as the market was pinned in a band and shows little sign of staging a breakout any time soon, brokers said. The key May cotton contract eased 0.53 cent to end at 79.50 cents per lb, dealing from 79.28 to 80.66 cents. It was an inside day as the range was within Tuesday's 78.14 to 80.68 cents band.
Volume in the May contract hit 11,748 lots at 2:39 pm EDT (1839 GMT). Most-active July cotton shed 0.52 cent to finish at 81.09 cents and new-crop December lost 0.24 cent to close at 75.70 cents. "We're straddling the fence," said Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana. "You can make the case we're in a 3-1/2-cents trading range."
Analysts said the market looks to trade between 78 and 81.5 cents and, unless major news intervenes, that band will not be broken at this time. Stevens said the market would also be watching if any exchange-certified cotton is decertified or taken out for use by one of the trading houses. Cotton brokers said they would be waiting for Thursday's release of the US Agriculture Department's weekly export sales report.
The brokers expected total US cotton sales to range from 200,000 to 300,000 (500-lb) running bales, down from 236,100 RBs in last week's sales data. The market also saw switch trade as players moved out of May before the contract goes into delivery on April 26. Open interest in the May contract was down 8,847 lots at 48,639 lots as of April 13, with open interest in July up 8,183 to 86,905 lots.
Brokerage Flanagan Trading Corp sees resistance in the May contract at 80.35 and 81.40 cents, with support at 78.45 cents. Volume traded Tuesday reached 46,490 lots, against the previous tally of 28,382 lots, according to ICE Futures US Open interest in the cotton market was at 190,025 lots as of April 13, up from the prior 189,331 lots, the exchange said.
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