Cotton futures edged lower on Tuesday as traders squared positions ahead of the year-end in thin, choppy trade ahead of the New Year holiday. The most-active March cotton contract on ICE Futures US closed down 0.03 cent, or 0.05 percent, at 61.98 cents a lb. The front-month was on track to finish 2014 down 27 percent, its biggest annual loss in three years, after farmers in key producers boosted acres and import demand slowed in top consumer China due to a policy overhaul.
Volumes were subdued during the shortened holiday week. Cotton trading on ICE would be closed on Thursday and was scheduled to reopen late on Friday. Prices have been pinned in a narrow trading range between producer selling near last week's six-week high and short-covering by speculators squaring books, traders said.
"The funds are short, so they are covering. (But) there's producer selling at these levels," said Jobe Moss, a broker with MCM Inc in Lubbock, Texas. Weekly US Department of Agriculture (USDA) data released on Monday showed a jump in export sales booked in the most recent reporting week, allaying concerns over weak demand in top consumer China. The US government Commitment of Traders (COT) report was due on Tuesday afternoon after being delayed due to last week's Christmas holiday. The report was widely expected to show a reduction in the bearish stance held by speculators.
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