Cotton futures settled with slight losses Wednesday on investor profit-taking in thin trade as players braced for release of a key government crop report tomorrow, brokers said. ICE Futures US benchmark December cotton contract eased 0.23 cent to finish at 80.0 cents per lb.
On Tuesday, the contract closed at 81.13 cents in the highest settlement close for the second position cotton contract since May 5, according to Thomson Reuters data. December traded from 80.33 to 81.19 cents. It was an inside day as the range held within Tuesday's 79.09 to 81.25 band. Volume traded in the December contract reached 6,537 lots at 2:44 pm EDT (1834 GMT). Total volume traded at 2:44 pm was at 8,740 lots, down 41.51 percent from the 30-day average of 14,942 lots, preliminary Thomson Reuters data showed.
Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana, said the ability of fibre contracts to post modest losses is "pretty impressive." He said the market bucked what would normally be the adverse impact of the strong dollar, which posted its best day in nearly two years as a gloomy US outlook and weak Chinese data suggested the world economy was slowing. Analysts said cotton market participants were also cautious in front of the key US Agriculture Department monthly supply/demand report on Thursday. The second USDA report would be its weekly export sales data.
The market is bracing for an increase in the US cotton crop, with good to excellent conditions in the main growing state of Texas. Brokers Flanagan Trading Corp put resistance in the December contract at 81.65 and 82.75 cents, with support pegged at 80.70 and 79.80 cents. Volume traded Tuesday hit 15,804 lots, up from the previous tally of 10,717 lots, ICE Futures US data showed. Open interest in the No 2 cotton market was at 192,181 lots as of August 10 versus the previous 189,834 lots, the exchange said.
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