Cotton futures closed mixed Wednesday as the market dawdled in a band while players adjusted positions ahead of a government crop report at the end of the week, brokers said. ICE Futures' July cotton contract rose 0.01 cent to finish at 70.37 cents per lb, trading from 69.37 to 70.61 cents.
The new-crop December contract eased 0.02 cent to 78.87 cents, dealing from 77.90 to 79.40 cents. Volume traded in the July contract at 3:33 pm (1933 GMT) was 5,117 lots, while December's tally was 1,155 lots. Sharon Johnson, cotton expert for First Capitol Group in Atlanta, said cotton futures held their own, given the strength in outside commodity market.
She said fibre contracts may well drift Thursday ahead of the monthly supply/demand report by the US Agriculture Department on Friday. The USDA data will contain the first estimate of supply and demand factors for the 2008/09 marketing season (August/July).
Most analysts expect US cotton output in 2008/09 to fall after US cotton sowings fell to a 25-year low. The trade is pondering how much cotton land in top consumer China may be sown instead to other grains or oilseed crops, they said.
"China and India are the two largest cotton producers who may see some land being switched, but quantifying the change accurately is difficult," Johnson said in a report. Separately, the trade will be taking a look at the weekly USDA export sales report after net upland cotton sales posted a marketing year top last week.
Cotton brokers expect total US cotton sales to reach between 200,000 and 300,000 (500-lb) running bales, down from sales of 736,800 RBs in last week's report. US cotton shipments are seen hovering from 200,000 to 300,000 RBs, versus shipments last week of 197,500 RBs.
Broker Flanagan Trading Corp sees resistance in the July cotton contract at 70.60 and 71.25 cents, with support at 69.80 and 69 cents. Volume traded Tuesday reached 16,714 lots, the exchange said. Open interest in the cotton market rose 174 lots to 247,979 lots as of May 6, it added.