NYCE cotton futures crumbled from speculative and options-related sales to end Monday at more than a one-year low, with further losses likely as investors roll out of July before first notice day on Thursday, brokers said.
July cotton settled down 1.91 cents at 50.09 cents a lb after trading from 51.50 to a new contract low of 49.60 cents. On a spot basis, it was the lowest close for cotton since settling at 48.63 cents on June 3, 2003.
New-crop December fell 1.17 cents to 53.28 cents, having moved from 53.05 to 54 cents, and the back months lost 0.18 to 1.44 cents.
"Its such a sick puppy," said Mike Stevens, an analyst with Swiss Financial Services in Mandeville, Louisiana.
Keith Brown, president of commodity trading firm Keith Brown and Co in Moultrie, Georgia, said combined speculative liquidation, co-operative and options-linked sales hammered futures throughout the session.
He said the market was "getting ready for July deliveries." Open interest in the July cotton contract fell 1,909 lots to 9,826 lots as of June 18 while interest in December gained 428 lots to 53,222 lots.
Traders said the market will likely watch US cotton crop growing conditions, particularly the weekly USDA crop progress report, for near-term price direction.
Going forward, they will then take a look at the annual USDA planting acreage report on June 30 because it will determine estimates on the 2004/05 US cotton crop and exports in the monthly USDA supply/demand report being handed out on July 12.
Brokers Flanagan Trading Corp pegged support in the July contract at 50 cents and the new contract low of 49.60 cents. It calculated resistance at 50.30 and 51 cents.
Floor dealers said estimated final volume at 14,000 contracts, up from Friday's tally of 6,929 lots. Open interest fell 1,434 lots to 77,918 lots as of June 18.