NYBOT cotton settled lower Tuesday on speculative selling in the face of a record crop, and analysts said more losses could be in store for the market.
US Department of Agriculture in its monthly supply/demand report raised its estimate for world cotton production in 2004/05 to 109.67 million (480-lb) bales from 107.25 million last month, and upped US production to a record 21.54 million bales from 20.9 million in last month's report.
December cotton settled down 1.73 cents at 44.79 cents a lb after trading from 43.75 to 45.50 cents. March dove 1.90 cents to 46.70 cents and the rest retreated 1.20 to 2.00 cents.
Sharon Johnson, cotton expert for Frank Schneider and Co Inc in Atlanta, said market players dumped cotton in reaction to the report, but futures received some support from trade and commission-house buying. But Johnson feels the market has not fully priced in the bearish USDA report and would need to do so in the days ahead. "I don't think we're done putting in the lows yet," she stressed.
Brokers Flanagan Trading Corp said cotton futures should "trade lower into the week."
Mike Stevens of Swiss Financial Services in Mandeville, Louisiana, said the area around 44.40/60 cents for December cotton managed to hold each time futures slipped. "Trade and locals are the best buyers in that area," he said. "Extremely good merchant buying is perceived to be still resting below 43.80 (cents in December)."
Analysts said the market will now be turning its attention to the weekly USDA export sales report to provide an indication whether the large cotton supplies available are finding homes.
Technicians peg resistance in the December cotton contract at 44.90 and 45.50 cents, with support in the region around 44 cents.
Floor dealers pegged estimated final volume at 19,000 lots, up from Monday's count of 5,582 lots. Open interest gained 568 lots to 72,167 lots as of October 11.