Cotton futures closed lower on Monday as the market consolidated near its highs and most players engaged in switch trading as the spot month goes into deliveries by the start of next week, analysts said. New York Board of Trade's open-outcry July cotton contract closed down 0.17 cent at 54.75 cents per lb after trading from 54.45 to 55.25 cents.
On Friday, the contract ended at 54.92 cents in the highest close for cotton since 55 cents in early March. The key December cotton contract shed 0.50 cent to 59.18 cents today, with the rest flat to 0.40 cent lower. IntercontinentalExchange's NYBOT electronic cotton market showed the July contract off 0.09 cent at 54.83 cents at 2:33 pm EDT (1833 GMT).
Frank Weathersby, an analyst for brokers Affinity Trading in Fort Walton Beach, Florida, said investors were "slowly leaching out" of the July contract since notices for delivery are scheduled to be posted on June 25. Open interest in July dropped 15,398 lots to 26,872 lots as of June 15 while interest in key December climbed 2,512 to 143,655 lots.
Analysts said futures will remain well supported on views that top consumer China may need to import several million (480-lb) bales of cotton in the months ahead.
"The confirmation that Chinese stocks were lower than expected and their stocks will be drawn down more during the 2007/08 season was the basis for the beginning of this current uptrend," said the weekly marketing report by analyst O.A. Cleveland.
Traders said any attempt to sell off the market has often run into very good support and it looks like key December is now poised to make a run at the 60-cent area.
"We should see 60 in December (contract), but that is probably after we get rid of July first," one said. Brokers Flanagan Trading Corp sees resistance in the July contract at 55.15 and 56.20 cents, with support at 54.60 and 53.95 cents.
Floor dealers said final estimated open-outcry volume stood at 21,000 lots versus the prior volume of 25,613 lots. Screen trade Friday was at 24,775 lots, NYBOT said. Open interest was at 210,039 lots as of June 15, down 11,694 lots from the previous session.