Cotton futures ended lower on Friday for the third session in a row in the face of a stronger dollar and investor selling, and analysts said the weak tone should persist into next week. Benchmark May cotton on ICE Futures US fell 1.44 cents or over 1.5 percent to conclude at 88.23 cents per lb, trading from 87.80 to 90.50 cents. For the week, cotton shed 2.13 percent.
Volume traded Friday was around 18,100 lots, preliminary Thomson Reuters data showed, down slightly from Thursday's tally of 18,504 lots. Sharon Johnson, senior cotton analyst at commodities brokerage Penson Futures in Atlanta, Georgia, said the December low around 84.25/35 cents would be a "valid target" for the market.
"The dollar is very strong today and that is not helping the cause a bit," she said. Traders said the failure of key May to establish itself above the 93 and 94 cents area of resistance prompted investors to liquidate positions in the market. Johnson and other dealers said some limited scale-down mill buying has emerged at the market's lows and served to trim its losses. But players said the tendency of mills at this point would be to wait for prices to bottom out before stepping back into the market.
Cotton will also take its cue from the way outside markets perform in the weeks ahead and this line-up of financial markets would include global stocks, gold, crude and the grains complex. Analysts said cotton players will also turn their focus to the next USDA monthly supply/demand report due out March 9. At the end of March, the USDA will then release its keenly awaited potential plantings report. Open interest in cotton, an indicator of investor exposure, rose for a fifth session running to 173,611 lots as of March 1, from the previous session's 172,767 lots, ICE Futures US data showed.
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