NYCE cotton futures finished down and near a two-month low Thursday as speculative long liquidation punished the market, but robust trade and suspected Chinese buying pruned the losses, dealers said.
March settled down 2.10 cents at 68.66 cents a lb after trading from 70.60 down its 3.00-cent limit of 67.76 cents.
It was the lowest close for cotton on a spot basis since December 2003. Since touching levels just above 76 cents late last week, the contract has tumbled over 7.00 cents. May fell 1.55 to 70.51 cents and the back months declined 0.20 to 1.40 cents.
"It's a total washout," said Joe Carney, an analyst for brokers iamhedged.com based in Memphis, Tennessee.
Jobe Moss of brokers and merchants MCM Inc. in Lubbock, Texas, said the speculative liquidation deflated cotton prices as the funds continued to reduce their long positions in cotton.
"(But) there's a lot of trade buying down there" at the market's lows, Moss added.
The weekly New York Board of Trade spec/hedge report showed the funds with a net long position of 43.9 percent as of the close of business on Friday. On Monday, the funds began their long liquidation.
After falling the 3.00-cent limit shortly after the onset of business, trade buying stepped up and stopped the rout.
Dealers said there was rampant talk the Chinese, who have not been seen in the market since the start of Lunar New Year festivities last week, were heavy buyers.
"We're hearing a lot of inquiries came in from the Chinese. All my trade customers were buying cotton," one said.
While the weekly USDA export sales report was disappointing because sales and shipments came in lower than expected, the focus for players quickly shifted to the trade and suspected Chinese buying.
Technically, chartists peg resistance in the March contract at 69 and 69.50 cents, with support at 68 cents.
Floor dealers said estimated final volume reached a hefty 46,000 lots from Wednesday's tally of 26,788 lots. Open interest fell 3,085 lots to 96,328 contracts as of January 28.