Cotton futures finished softer Monday on investor sales triggered in part by the firm dollar, weak soybean futures and favourable growing weather in the US cotton belt, brokers said.
ICE Futures' July cotton contract fell 0.15 cent to end at 71.81 cents per lb, trading from 70.24 to 71.96 cents. The new-crop December cotton contract eased 0.04 cent to 80.61 cents, dealing from 79 to 80.70 cents.
Volume traded in the July contract at 2:59 pm (1859 GMT) was at 9,220 lots while December's tally was at 4,340 lots. Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana, said cotton prices run into support on a probe below 70.50 cents, basis July.
He said the contract would need to settle over 72 or even 72.50 cents to punch its way higher. "It's grinding," he said, adding the move on Monday to the lows quickly received trade support so the selling pressure was quickly absorbed by cotton market players. Marketing analyst O.A. Cleveland said: "The 70-73 cents level, basis July, will likely be the primary trading area for another month."
He feels though that "a test of 68 cents (basis July) is in the works, just as is (a) touch of 74 cents. Currently, the market is attempting a seasonal rally that could challenge the 74-cent mark." Analysts said the December contract is poised to take over from the July contract with the new marketing year (August/July) on the horizon.
Futures were hit by investor sales and briefly slipped below 70.50 cents in July, but the suspected consumer and trade fixation buying stopped the downturn and turned fibre contracts the other direction, dealers said.
Brokers Flanagan Trading Corp sees resistance in the July cotton contract at 72.50 and 73.40 cents, with support at 71.25 and 70.60 cents. Volume traded Friday reached 22,463 lots, the exchange said. Open interest in the cotton market rose 3,187 lots to 259,699 lots as of May 16, it added.