Cotton futures extended a losing streak to close on Tuesday at a fresh seven-week low as technical pressure kept the market on the defensive for now, brokers said. The July cotton contract fell 0.67 cent to finish at 52.43 cents per lb, dealing from 52.29 to 53.97 cents.
On Monday, the contract sank the 3.00-cent limit. It was the lowest finish for cotton on a spot basis since late April. Volume traded in the July contract was at 8,263 lots at 2:35 pm EDT (1835 GMT). The new-crop December cotton contract shed 0.48 cent to settle at 57.74 cents, moving from 57.40 to 59.08 cents. "We tried to recover," said Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia.
But the market faltered at the top of the range and fibre contracts tumbled into negative territory. Analysts cautioned that withering heat will plague the US cotton belt in the week ahead. The National Weather Service said temperatures in the high plains of Texas, the main cotton growing region of the state, are expected to exceed 100 Fahrenheit (38 Celsius).
Brown said high temperatures could stress cotton crops in the area since most of the cotton is not irrigated. The market is monitoring the unwinding of positions in the spot July contract before first notice day for deliveries in the spot contract are posted next week. Open interest in the July contract is down 6,541 lots to 27,122 contracts as of June 15.
More importantly, the trade is turning its focus to the release on June 30 of the US Agriculture Department's annual planted acreage report. Brokers Flanagan Trading Corp sees support in the July cotton contract at 52 and 51.10 cents, with resistance pegged at 52.75 and 53.85 cents. Total volume traded Monday reached 26,751 lots, versus the previous tally of 17,800 contracts, exchange data showed. Open interest in the cotton market was at 123,533 lots as of June 15, from the previous count of 129,202 contracts, ICE Futures US said.