Cotton futures finished near session lows Thursday, extending the previous day's slide, as speculative and option-related sales pressured prices and a strong weekly US government sales report failed to attract buyers, market sources said.
The New York Board of Trade's December cotton contract dropped 0.56 cent to close at 48.11 cents a lb, one point off the bottom of its 48.10-48.75 cent band.
March lost the same to end at 50.09 cents and the rest of the board slipped 0.10 to 0.60 cent.
"The trade seems willing to sell on rallies and not as willing to buy on dips here. Most buyers here and overseas are bearish, looking at the supply issues," said one broker.
Cotton futures opened with modest gains but failed to attract any more buying, which caused speculators and option-related selling to cap the advance despite stronger-than-expected weekly US Department of Agriculture export sales data.
The US Department of Agriculture's weekly export sales report showed US cotton sales at 410,000 running bales (RBs, 500-lbs each), against trade forecasts it would range from 150,000 to 250,000 RBs.
US cotton shipments of previously booked orders amounted to 318,800 RBs, compared to trade expectations it would reach between 250,000 and 350,000 RBs.
"We were very surprised with last Thursday's numbers and this market has become somewhat jaded over time, so even though these numbers were out of range from what we were expecting, we may not see much of a reaction this time around because we've been there before," said Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia. Another bearish factor weighing on the market was the path of Tropical Storm Katrina, which is projected to cut across southern Florida on Friday and possibly cross over Georgia.
"I don't think it will be strengthening, so I think it will be a lot of rain which will be beneficial for the crop because it is not late September when the bolls are open and the cotton is exposed, so it should help," said one cotton broker in Georgia.
Traders said resistance in the December contract was pegged at 49.10 and 49.80 cents, with support at 48.00 and 47.25 cents. Floor traders estimated final cotton futures volume at 6,000 lots, compared with 7,169 lots on Wednesday. Open interest eased 53 lots to 104,422 lots as of August 24.