NYCE cotton closed softer Friday on speculative liquidation in two-way business with players uncertain about the market's move in the days ahead, analysts said.
July cotton eased 0.37 cent to finish at 64.97 cents a lb, trading between 63.65 and 66.19 cents. New-crop December lost 0.42 cent to 61.85 cents. Except for one contract, distant months declined 0.13 to 0.45 cent.
"The market's been very two-sided," said Keith Brown, president of commodity trading firm Keith Brown and Co in Moultrie, Georgia.
Jobe Moss, an analyst for merchants and brokers MCM Inc in Lubbock, Texas, said speculators who had aggressively bought cotton on Thursday headed for the door when the market failed to claw its way higher.
"You just had everybody too long," he said.
Floor brokers said one merchant engaged in options-related buying at the start which was met by sales from a cotton house. The two switched positions later on Friday and this forced small speculators to bail on their positions, they said.
"One major merchant has been selling calls and buying puts in huge volume in recent weeks and is now being forced to buy those options back at higher prices," said a daily commentary by brokers Flanagan Trading Corp.
Fundamentally, traders said the market was keeping tabs on growing conditions in the US and elsewhere. They were also watching further decertifications of cotton in the exchange.
US cotton farmers may find it difficult to turn a profit this year due to high prices for fuel, fertiliser and other agricultural inputs, an official of an industry group said Friday.
Plain Cotton Growers (PCG) executive vice president Steve Verett said in a forum that "all inputs for 2004 are costing more, from seed and fertiliser to fuel and irrigation costs."
Flanagan Trading put resistance in July at 65.50 and 66.15 cents with support at 64 and 63 cents.
Floor dealers pegged estimated volume at 12,500 lots, up from Thursday's count of 11,230 contracts. Open interest fell 383 lots to 81,931 contracts as of May 13.