Cotton futures closed lower on Tuesday due to steady speculative sales and market operators said the market could drift until release of an industry plantings survey at the end of the week, analysts said.
The New York Board of Trade's March cotton contract shed 0.22 cent to settle at 53.35 cents per lb, near the bottom of its 53.32 to 53.90 cents band. May cotton fell 0.19 to 54.45 cents. The rest lost from 0.09 to 0.22 cent.
Frank Weathersby, an analyst for brokers Affinity Trading in Fort Walton Beach, Florida, said the March contract seems to be working its way toward a level of support around 52.85 cents. "I think that's what we're moving to," he said, adding players would try to see if they could touch off automatic "sell" orders below that area. If not, the market will go in the opposite direction.
A report by Sharon Johnson, cotton expert at First Capitol Group in Atlanta, Georgia, said the 52.85 area represents the January 12 low. "Failure to hold at the 52.50 area would throw open the doors for collapse to (the area of) of 50.90 (cents). As poor as export business is, I do not expect a re-test of the fall lows but the market's performance over the next two days, 100 points down will speak volumes as to its true intentions," she said.
Analysts said the market is awaiting release of the National Cotton Council's annual plantings survey due out on Friday. Traders expect cotton to lose acreage to cotton and possibly soybeans following a robust rally in the grains pit the past few months.
Next week, the market will turn its focus to the monthly supply/demand report of the US Agriculture Department due out on February 9 and the return of buyers from top consumer China after their Lunar New Year celebrations on February 18. Broker Flanagan Trading Corp sees resistance in March cotton at 53.60 and 54.10 cents, with support at 53.10 and 52.65 cents.