Cotton futures closed easier Monday on modest speculative sales as the trade mulled the next price move now that the spot May contract is into its delivery period, brokers said.
The New York Board of Trade's July cotton contract slid 0.41 cent to finish at 52.11 cents a lb, dealing from 52.10 to 52.65 cents. December lost 0.47 to 56.30 cents. The rest lost 0.20 to 0.75 cent.
Sharon Johnson, cotton expert for First Capitol Group in Atlanta, said speculative sales nudged the market lower although scale-down trade buying was seen at the lows.
She said the July contract appears to be looking for a low, but that dealings were subdued on the day.
The May contract was almost totally liquidated at the close of trade last Friday. Open interest in the contract dove 9,127 contracts to 1,551 lots as of April 21, the session before notices on deliveries commenced.
The exchange said the main stopper in deliveries was leading merchant Dunavant Enterprises with 405 lots and the sole issuer was Term Commodities with all 674 lots.
"The appearance of a major merchant as a stopper is friendly to futures and especially since it is Dunavant, who took all of the March deliveries," said a daily commentary by brokers Flanagan Trading Corp.
Now that deliveries are getting under way, the attention of the trade will soon turn to the severe dry spell gripping large swathes of the US cotton belt, analysts said.
"There is still a little time, but we will need to put in a weather premium for this crop soon," a dealer said.
The market will also be waiting to get another look at robust cotton demand in the weekly export sales report by the US Department of Agriculture, which is due out on Thursday.
Flanagan Trading put resistance in the July cotton contract at 52.15 and 53.15 cents, with support at 51.60 and 50.80 cents.
Floor dealers said final trading volume was estimated at 10,500 lots, down from Friday's count of 24,451 lots. Open interest fell 4,683 lots to 138,248 contracts as of April 21.