Cotton futures finished lower Friday on follow-through investor liquidation as the market seems poised to test key support at the bottom of its trading band, brokers said. The December cotton contract lost 0.68 cent to settle at 60.66 cents per lb, trading from 60.59 to 61.99 cents.
December contract volume reached 6,703 lots at 2:40 pm EDT (1840 GMT). March cotton fell 0.45 cent to end at 63.11 cents, dealing from 62.92 to 64.22 cents. Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana, said the market may see additional pressure next week due to the downturn in fibre contracts.
"Extreme moves on Friday don't just go anywhere," he said, pointing to previous sessions in the market when a sharp move failed to generate follow-through momentum the next day. Analysts said market participants will be watching closely if the December contract breaks below 60 cents in the days ahead.
"A close below 60 cents and certainly 58 cents will force specs to liquidate longs while adding to shorts but as the saying goes, 'let's take this one day at a time,'" said a report by Sharon Johnson, cotton expert at First Capitol Group in Atlanta, Georgia. The market would be turning its focus to a key government supply/demand report from the US Agriculture Department. "We still have to get through next Friday's USDA supply/demand report and although world crop losses are widely expected upwards of 1.0-1.5 million (480-lb) bales, knowing is not the same as seeing," she said.
Brokers Flanagan Trading Corp sees support in the December cotton contract at 60.30 and 59.55 cents, with resistance at 61.25 and 62.60 cents. Total cotton volume traded Thursday was at 8,297 lots, compared to the prior tally of 14,158 lots, ICE Futures US said. Open interest came to 144,860 lots as of October 1, off from the previous count of 146,055 lots, the exchange said.