Cotton futures settled easier Monday on speculative sales as the market slumped when it failed at its highs and fiber contracts could slip further due to follow-through sales in the days ahead, brokers said.
The New York Board of Trade's key December cotton contract slipped 0.65 cent to conclude at 51.87 cents a lb, ranging between 51.57 and 52.75 cents. It was the lowest close for the contract since trading just a little over 51 cents in late September. March shed 0.50 cent to 54.49 cents. Distant month losses ranged from 0.48 to 0.70 cent.
Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana, said the inability of the December contract to get over the Friday high of 52.80 cents prompted players who trade on the price level in the market to bail out.
"Until a convincing close above 53.05 (cents, basis the December cotton contract) is achieved, the downside is still open with possible objectives between 51.60 and 50.50 cents," he said.
Fundamentally, most investors are monitoring the harvest of the huge US cotton crop and whether demand will be sufficient to absorb the large amount of supplies of cotton.
The trade is also looking at the intense negotiations among the trading powers ahead of the World Trade Organisation talks on farm trade in Hong Kong in December and prospect the negotiations may well flop.
Cotton futures crawled higher from the opening bell, but the market just could not punch through.
"The failure to take out Friday's high at this critical level attracted option related selling as well as additional spec liquidation based on just plain poor technicals," said Stevens.
Brokers Flanagan Trading Corp put resistance in December delivery at 52.05 and 52.50 cents, with support at 51.30 and 50.50 cents.
Floor dealers said estimated final volume was 15,000 lots, against the prior tally of 20,970 lots. Open interest fell 1,319 lots to 117,465 contracts as of October 28.