Cotton futures finished lower Tuesday on investment sales and the market may test the lower end of its trading range following a holiday weekend, brokers said. The market was closed Monday for the Martin Luther King Jr. holiday. The key March cotton contract declined 2.19 cents to close at 46.81 cents per lb, trading between 46.76 and 49.25 cents.
Volume traded in the March contract was at 6,417 lots at 2:44 pm EST (1944 GMT). The May contract retreated 2.33 cents to settle at 47.25 cents. Mike Stevens, analyst for brokers SFS Futures in Mandeville, Louisiana, said the close below the Friday low of 47.65 cents meant the March contract may again mount a probe of major support at 46 cents. "That will portend technical weakness," he said.
A major factor for cotton losing ground is the sharply lower tone of soybean futures in Chicago, with nearby months losing heavily in Tuesday's session. "This is one of those days when the beans will determine direction (for cotton)," said Stevens. The market will slowly be turning its attention in the weeks ahead to likely US cotton plantings in 2009.
A Reuters survey at the annual Beltwide cotton conference earlier this month showed industry participants expect US 2009 cotton sowings to fall to an average of 7.9 to 8.2 million acres, from 9.4 million in 2008. Cotton opened at its session top and then progressively lost value for the rest of the session, dealers said.
Brokers Flanagan Trading Corp said it sees resistance in the March cotton contract at 47.15 and 48 cents, with support at 46.25 and 45.30 cents. Volume traded Friday reached 11,915 lots, exchange data showed. Open interest in the cotton market was at 129,917 lots as of January 16, from 129,867 lots in the previous session, it said.