Cotton futures corrected down to end lower on Wednesday, on profit taking from Tuesday's 4-1/4 year high and spillover pressure from early weakness in the US grains markets, brokers said. "Principally, it's the pressure in Chicago (wheat) that's weighing on them, We hit sell stops, don't have as much buying, so it's kind of a combination," said Sharon Johnson, senior cotton analyst at First Capitol Group in Atlanta.
ICE Futures' open-outcry May cotton contract closed 1.55 cents lower at 77.93 cents per lb, with a trading range from 77.30 to 79 cents. The new-crop December cotton contract finished down 1.53 at 83.50 cents. The rest slipped 0.90 to 2.20 cents.
Agricultural futures contracts trading on ICE will become fully electronic March 3. The last day of floor trade is Friday. The May electronic cotton contract was 1.73 cents weaker at 77.75 cents at 3:04 pm EST (2004 GMT), in a trading band from 77.23 to 79.70 cents. Chicago Board of Trade wheat fell sharply during early trade before soaring into positive territory, but cotton futures were unable to gain traction after the initial spillover pressure.
"Prices have reached this ridiculous level and this is just a blip. We've got our first correction that we've seen in a while," said Mike Stevens of Swiss Financial Services in Louisiana. Open interest in the March contract dropped 872 lots at 2,433 lots as of February 26. First delivery date for the contract is March 3. Open-outcry volume Tuesday sat at 5,642 lots while 45,127 lots traded on the electronic platform. Open interest in the cotton market rose 3,904 lots to 290,439 lots as of February 26, exchange data showed.