Cotton futures finished with slight losses Friday as investors unwound the last of their positions in the spot May contract before deliveries are posted on Monday, brokers said.
The New York Board of Trade's May cotton contract eased 0.21 cent to close at 50.67 cents a lb, dealing from 50.50 to 51.20 cents. July shed 0.29 to 52.52 cents. Two contracts aside, the rest fell 0.20 to 0.87 cent. "It's (all) May/July spreads," said Jobe Moss, an analyst for brokers and merchants MCM Inc in Lubbock, Texas.
He said there was little in outright stuff done in the market although some trade buying enabled the market to stage a modest rebound off the day's lows.
Open interest in the May contract fell 3,480 contracts to 10,678 lots as of April 20 while interest in July rose 4,351 to 93,986 contracts.
Analysts said they expect open interest in May to have fallen to around 6,000 to 7,000 lots at the close of trade on Friday.
A report by Sharon Johnson, cotton expert for First Capitol Group in Atlanta, said commodity funds and speculators could pressure cotton futures in the days ahead.
"I cannot ignore the possibility that cotton futures may move lower but such a drop would not be long lasting given demand and only adds to the upside potential. The outcome of FND (for deliveries) with the May contract on Monday should provide some clues for next week's trade," she said.
The other factor market players are going to watch closely would be whether the severe dry spell which hit parts of the US cotton belt will persist as a problem during the spring planting season.
"Precipitation should be near normal during May across the southern US but the (US) Southwest is forecast to experience below if not well-below-normal rainfall in the months of June and July. South Texas will remain without benefit of normal precipitation with very hot temperatures during the next three months," she said.
Brokers Flanagan Trading Corp put resistance in the May cotton contract at 50.80 and 51.50 cents, with support at 50.10 and 49.65 cents.
Floor dealers said final trading volume was estimated at 25,000 lots, down from the prior count of 30,221 lots. Open interest rose 2,871 lots to 143,299 contracts as of April 20.