Cotton futures finished softer on Tuesday on speculative sales in range-bound business although analysts said they are already looking toward a government crop report and at how China, the world's top consumer of cotton, handles its severe winter storms.
ICE Futures' open-outcry March cotton contract dropped 0.77 cent to end at 68.10 cents per lb, moving from 67.85 to 68.25 cents. May cotton fell 0.86 to 69.93 cents and the new-crop December cotton contract sank 0.89 cent to 76.58 cents. ICE March electronic cotton futures retreated 0.86 cent to 68.01 cents at 3:16 pm EST (2016 GMT), moving from 67.85 to 68.93 cents.
Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana, said the March contract remained within the range of the January 23 limit move of 66.83 cents to 69.25 cents. "The middle of the January 23rd range is 68.04 (cents). The middle of the six-week run from early December to the middle of January is 67.93 (cents," Stevens said in a report. He said the market will probably stay in this band until the US Agriculture Department's monthly supply/demand report is handed out on Friday.
The trade would also want to see how the situation in China is resolved after the worst winter storms in a century disrupted power supplies to mills and the country's economy. Traders said market players were also monitoring the performance of the grains market, where rallies in soybeans and wheat to multiyear highs may lure American farmers to plant grains instead of cotton this spring.
Futures lost ground at the start to quickly reach session lows, but the strong tone of grains prices inspired short-covering in cotton futures, they said. Brokerage Flanagan Trading Corp sees resistance in the March open-outcry cotton contract at 68.60 and 69.30 cents, with support at 67.75 and 66.50 cents. Open-outcry volume Monday was at 4,851 lots and screen business was at 22,232 lots. Open interest in the cotton market rose 1,443 lots to 280,019 lots as of February 4, exchange data showed.