New York cotton futures smidgen lower

06 Aug, 2008

Cotton futures ended down a shade on Tuesday after an early bout of speculative short-covering interest petered out, leaving the market languishing around the 69-cent level. Benchmark December ended down 0.10 cent at 69.03 cents per lb. Range from 72.13 down to 68.20 cents, the contract's lowest point since September 7.
December volume 17,350 lots at 3 pm EDT (1900 GMT). A sharp drop in values Monday presented some value for cotton merchants in overnight business, dealers said. "A significant amount of US cotton apparently moved last night, so we obviously found some value below 69.00 cents. It appears to have good underlying value now," said Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana.
Cotton market brushes off weather-related threats to the Texas crop as forecasts called for Tropical Storm Edouard to weaken as it moved inland. Edouard had weakened slightly as it came ashore on the Texas coast Tuesday, and was expected to lose intensity as it moved across central Texas. "If anything, it will probably bring some needed relief to moderate temperatures and some welcome rain in West Texas," SFS Futures' Stevens said.
Noted Colorado State University hurricane research team on Tuesday raised its forecast for the 2008 Atlantic hurricane season, saying it now expects 17 tropical storms to form, with nine of them to strengthen into hurricanes. Traders were looking toward the August 12 release of the US Department of Agriculture's monthly supply/demand report, which will give the market a first detailed look at the crop in the 2008/09 marketing year (August/July).
Volume Monday totalled 29,735 lots, exchange data showed. Open interest in the cotton market declined by 3,685 lots to 220,489 contracts open as of August 4, exchange data showed. "The fact that open interest dropped 3,685 yesterday shows that yesterday's break was liquidation, not new short selling," SFS Futures' Stevens said.

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