Cotton futures settled easier Wednesday on investment sales and switch trade, with analysts saying the market could move in a band while waiting for leads on its next move, brokers said. The July cotton contract fell 0.23 cent to close at 54.63 cents per lb, moving between 54.45 and 56.20 cents.
Volume traded in the July contract was at 10,170 lots at 2:43 pm EDT (1843 GMT). The new-crop December cotton contract shed 0.17 cent to conclude at 59.35 cents, ranging from 59.11 to 60.87 cents. Frank Weathersby, an analyst for brokers Affinity Trading in Fort Walton Beach, Florida, said chart-based market players wanted to see if the market can push below 54 cents in the July contract.
He said market players will be waiting for options expiry in the July cotton contract at the end of the week and tomorrow's release of the weekly US Agriculture Department's export sales report. Cotton brokers believe total US cotton export sales will range from 150,000 to 200,000 running bales (RBs, 500-lbs each), from 172,900 RBs in last week's report.
Analysts said the USDA's monthly supply/demand report was constructive for cotton futures. USDA reduced its estimate for world 2009/10 cotton ending stocks to 56.54 million (480-lb) bales, from 57.77 million bales in last month's report. Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia, said the USDA monthly numbers were likely priced into the market.
Brokers Flanagan Trading Corp sees support in the July cotton contract at 53.85 and 52.75 cents, with resistance pegged at 54.65 and 55.50 cents. Total volume traded Tuesday reached 19,599 lots, versus the previous tally of 25,778 contracts, exchange data showed. Open interest in the cotton market was at 132,890 lots as of June 9, from the previous count of 132,391, ICE Futures US said.