Cotton futures closed softer Monday on investment sales to wipe out gains from an early run-up caused by worries over hot and dry weather in the key growing area of Texas, brokers said. Analysts said the market's focus will now wait for release of Tuesday's USDA monthly supply/demand report.
The now-benchmark December cotton contract fell 0.41 cent to conclude at 74.54 cents per lb, ranging from 74.10 to 76.13 cents. The spot July contract shed 0.52 cent to end at 66 cents, trading from 65.50 to 67.93 cents. Volume in the December contract stood at 13,171 lots at 2:59 pm EDT (1859 GMT) while July volume was at 13,224 lots.
Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia, said news of the blistering weather in Texas, which will plant half of all US cotton this season, buoyed cotton futures early.
Forecasters DTN Meteorlogix said Texas should be mostly dry through Thursday and maybe get some showers Friday. Temperatures will range from 63 to a baking 98 degrees Fahrenheit (17 to 37 Celsius). "(But) the macro picture is still negative for cotton," he said, pointing in particular to a burdensome stock situation and the amount of fibre which will be delivered when the July contract goes into delivery in two weeks' time.
Brown said the market could not even rally last week when the US Agriculture Department's weekly export sales report showed total US cotton sales at 577,900 running bales (RBs, 500-lbs each).
Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana, said there should be some modest changes in the cotton figures of the USDA but the trade may well wait for the USDA's annual planted acreage report before they see reliable numbers on the global supply picture. Traders said resistance in the December contract was at 75.41 cents, with support pegged at 73.50 and 73 cents. Volume traded Friday in the cotton market hit 52,052 lots, exchange data showed. Open interest in the cotton market sank 6,064 lots at 268,535 lots as of June 6, it added.