Cotton futures settled easier Wednesday as speculative sales beat back fibre contracts and the market turned lower after surging last week up a five-week peak, brokers said.
New York Board of Trade's open-outcry July cotton contract slid 1.18 cents to end at 49.14 cents per lb, near the bottom of its 49.10 to 50.15 band. New-crop December dropped 0.97 cent to 54.43 cents while the rest slid 0.98 to 1.15 cents.
Intercontinental Exchange's NYBOT electronic cotton market showed the July contract down 1.07 cents at 49.25 cents at 2:25 pm EDT (1825 GMT). "We needed to pull back and today was as good a day as any," said Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia.
She said a lack of follow-through buying undermined the market and prompted players to sell the difference between spot July and the next-most active December contract. The market may consolidate around here while waiting for inspiration on its next move, according to Johnson. Fundamentally, the trade is monitoring the development of the crop in the US cotton belt, with more than ample soil moisture levels in the top growing state of Texas and a withering dry spell plaguing the south-eastern United States. The market will be digesting Thursday's weekly export sales report from the US Agriculture Department.
Brokers expect total US cotton sales to range from 200,000 to 500,000 running bales (RBs, 500-lbs each) versus 349,200 RBs in last week's report. They said US cotton shipments of previously booked orders should stand between 250,000 and 350,000 RBs against 268,800 RBs in the USDA data last week. Brokers Flanagan Trading Corp sees support in the July contract at 48.70 and 48.10 cents, with resistance at 49.25 and 50 cents.
Floor dealers said estimated open-outcry volume stood at 11,000 lots, from the prior total volume of 8,278 contracts. Screen trade Tuesday was at 11,102 lots, NYBOT said. Open interest amounted to 225,427 lots as of May 22, up 2,069 lots from the previous session.