Cotton futures closed mostly lower Wednesday on speculative sales as most of the trade appear to be tweaking their positions ahead of the release of a key government crop report next week, brokers said.
New York Board of Trade's December cotton contract shed 0.10 cent to settle at 53.41 cents per lb, moving from 53.10 to 53.50 cents. March fell 0.11 to 57.06 cents. One contract aside, the rest were flat to 0.21 cent lower.
Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia, said speculative funds continued to press the market lower but trade buying and export business quickly propped up fibre contracts.
She said the key December contract may trade in a 100-point band between 53 and 54 cents over the next few days until the US Agriculture Department releases its monthly supply/demand report next Tuesday.
The data will contain the latest update on production in the leading producers like the US and China and provide projections about possible demand in the 2006/07 marketing year (August/July). Cotton prices established a tight trading band in the first hour of trading and did not stray from that range the rest of the day, dealers said.
"It slipped a little, but the range was so narrow there was nothing to really take off this market. It is already on waiting mode to see how the USDA data shakes out," a dealer said. Traders said the market would want to see if the USDA will change its estimate for US cotton output in 2006/07 of 20.43 million (480-lb) bales. Most estimates in the trade range from as low as 19.3 million bales to flat at 20.43 million bales.
The market will also be looking if USDA changes numbers for China, India and Pakistan, the analysts said. Brokers Flanagan Trading Corp sees resistance in the December contract at 53.50 and 54 cents, with support at 52.80 and 52.35 cents.
Floor sources said final estimated trading volume came to 12,000 lots, from the previous 14,039 lots. Open interest in the cotton market fell three lots to 173,161 lots as of September 5.