NYCE cotton closed Wednesday at another seven-week low on options-related and speculative sales, with the market looking at further weakness ahead of options expiration in the days ahead, analysts said.
July cotton slid 0.85 cent to close at 57.38 cents a lb, trading between 59.15 and a new contract low of 55.50 cents.
On a spot basis, it was the lowest close for cotton since trading around 57.30 cents in mid-April.
December shed 0.03 to 58.13 cents and, except for one contract, distant months fell 0.05 to 0.65 cent.
"This is a very treacherous time (in cotton)," said Sharon Johnson, cotton expert for Frank Schneider and Co Inc in Atlanta, Georgia.
She and other brokers said that if the July cotton contract fails to hold at its current lows, it may fall all the way down to the next target of 52 cents.
The daily report of brokers Flanagan Trading Corp said a major merchant had bought large quantities of puts and sold calls in the options pit.
"Those options expire in eight trading sessions so at least that merchant is not expecting a rally in the next eight days," it said.
The speculative and options-linked sales kept cotton under pressure until trade buying emerged at the lows.
Fundamentally, the market took note of the weekly USDA crop progress report showing 86 percent of the US cotton crop planted, against 78 percent the same week last year and the average of 82 percent.
The weekly New York Board of Trade spec/hedge report showed the funds holding a net short position of 30.4 percent against a net short of 27.9 percent last week.
Flanagan pegged support in July cotton at 57.35 and 56.65 cents with resistance at 58.10 and 59.30 cents.
Floor dealers said estimated final volume reached 22,000 lots from Tuesday's tally of 16,008 contracts. Open interest rose 598 lots to 81,883 lots as of June 1.