NYBOT cotton futures finished mostly easier Wednesday as attempts by the funds to nudge the market higher ran into speculative sales, with players mulling whether key December has enough firepower to push past a key resistance area, dealers said.
Key December cotton slipped 0.47 cent to conclude at 45.48 cents a lb after dealing from 45.25 to 46.25 cents. March eased 0.18 to 46.82 cents. Back months ranged from 0.51 cent lower to 0.30 cent firmer.
Mike Stevens, an analyst for Swiss Financial Services in Mandeville, Louisiana, said 46 cents in December is akin to a "line in the sand" for market bulls and bears.
"It is an area that should be a battleground after three up days," he said.
An initial flurry of speculative buying hoisted cotton to its highs for the session, but that soon petered out as sales of small speculators led the market down, dealers said.
"The locals got trapped (at the top) so they had to get out," said Stevens.
David Moore, an analyst for Harvey Price Cotton Co, said that while 46 and then 47 cents in December are important, he feels the contract would need to sustain a close over 49 cents on a daily and weekly basis to break the hold of bears in futures.
Cotton prices have been hammered by ideal growing weather in the US cotton belt and elsewhere.
Looking toward the US Department of Agricultures weekly export sales report, cotton brokers combined US net upland cotton sales are seen ranging from 100,000 to 120,000 running bales (RBS, 500-lbs each), versus 117,900 RBs in last weeks report. Shipments are said to reach between 275,000 and 325,000 RBs versus 275,600 RBs in last weeks data.
The USDA data are due out Thursday at 8:30 am EDT (1230 GMT). This is the last sales report for 2003/04 as it covers the period to the end of July.
The brokers said if US cotton upland shipments hit at least 340,000 RBs, the USDA projection that US cotton exports will hit 13.8 million (480-lb) bales should be reached.
According to USDA figures, total US cotton exports stand at 12.91 million RBs. Exports would need to reach around 13.3 million RBs to get to the USDA target, analysts said. One of the biggest importers of US cotton has been China, which has bought about 4.82 million RBs in 2003/04.
Brokers Flanagan Trading Corp pegged support in the December contract at 45.50 and 44.20 cents with resistance at 46 and 46.65 cents.
Floor dealers said estimated final volume amounted to 8,000 contracts, off from Tuesdays tally of 8,321 lots. Open interest fell 894 lots to 78,625 lots as of August 3.