Cotton futures buckled from speculative sales to finish Friday near session lows ahead of the holiday weekend, and the weak tone could spill into next week, brokers said. The cotton market will be shut Monday for US Labour Day. Trading resumes on Tuesday.
New York Board of Trade December cotton slid 1.18 cents to end at 53.90 cents per lb, dealing from 53.81 to 54.83 cents. March dove 1.21 to 57.52 cents and the rest retreated 0.60 to 1.15 cents.
Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana, said it appears that small speculators wanted to press December below 54 cents, despite good trade buying at those levels. "The trade was absorbing whatever was coming in," he said.
Traders said the market may slip a bit after it comes back from the holiday, but they feel fibre contracts will again settle into a band while waiting for more indications on how the supply/demand equation will shape up in the weeks ahead.
"The locals just wanted to lean on it and really wanted to get below 54 cents. But I wouldn't be surprised if we get some export business done and we come back next week the other way," one dealer explained.
The market took note that then tropical storm Ernesto roared into the Carolinas.
A daily report by brokers Flanagan Trading Corp in North Carolina said Ernesto passed "directly over North Carolina cotton areas" and that some areas got up to 10 inches of rain while others received 5.0 inches.
"It is difficult assess the damage done, and it will take another week to let the crop dry out before a preliminary assessment can be made. For now, we think minimal damage will be seen if the water drains off quickly and dry weather follows," the broker said.
Flanagan put resistance in the December contract at 54 and 54.75 cents, with support at 53.50 and 52.80 cents. Floor sources said final estimated trading volume came to 14,000 lots, up from Thursday's tally of 12,002 lots. Open interest rose 451 lots to 172,081 contracts as of August 31.