Cotton futures closed lower Friday on investor sales and spread trade as most players were sidelined waiting for release of a government crop report and options expiration next week, brokers said. The December cotton contract retreated 0.87 cent to settle at 66.54 cents per lb, trading from 66.47 to 67.82 cents.
December contract volume reached 14,314 lots at 2:48 pm EST (1948 GMT). March cotton fell 0.66 cent to close at 70.33 cents, trading between 70.25 and 71.49 cents. "We're still in the middle of a range we've been in since the middle of October," said Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana.
He said most players will be content to monitor the rolling of positions out of the December contract and into the March contract.The market would also be waiting for options expiration in December at the end of next week. On Tuesday, the market will be digesting the monthly supply/demand report from the US Agriculture Department.
A Reuters poll showed the trade expects the USDA to reduce its estimate for the US 2009/10 cotton crop to an average of 12.69 million (480-lb) bales, against the USDA forecast in October of 13 million bales. In 2008/09, US cotton output hit 12.82 million bales.
"The deluge of rains since the middle of September across much of the (US) Mid-South has made this harvest the lowest in more than a quarter century and is negatively impacting quality of the crop in the region," said a report by Gary Raines, chief economist at FC Stone Fibers and Textiles.
Brokers Flanagan Trading Corp sees resistance in the December contract at 66.65 and 67.50 cents, with support at 65.65 cents. Total cotton volume traded Thursday hit 20,518 lots, from the prior tally of 12,985 lots, ICE Futures US said. Open interest in cotton stood at 190,706 lots as of November 5, from the prior count of 189,581 lots, the exchange said.