Cotton futures ended lower Tuesday on investor sales as a weak technical outlook and soft outside markets dampened the mood in fibre contracts, brokers said. Key March cotton declined 1.45 cents to close at 72.79 cents per lb, dealing from 72.63 to 74.20 cents. It was an inside day as that range held within Monday's 72.55 to 74.49 band.
Volume traded in the March contract hit 9,117 lots at 2:38 pm EST (1938 GMT). "The technical deterioration we saw last week is still in effect," said Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana. Traders said the inability of the March contract to hold a key area around 73.43 cents meant there was little incentive for players to push the market up.
"We couldn't extend beyond 74 so the easiest path after that is down," one explained. Another factor was the announcement by China it would raise bank reserve requirements which depressed markets around the world, with oil and grins taking a licking in today's session.
The sour mood spilled into cotton and kept fibre contracts on the defensive for the rest of the session. The release of the US Agriculture Department's monthly supply/demand report failed to inspire cotton futures since the data showed only small changes. "There's nothing in this report for the bulls to be hollering about. But the bears did not get anything either," said Sharon Johnson, cotton expert for First Capitol Group in Atlanta.
Brokers Flanagan Trading Corp put resistance in the March contract at 72.85 and 74.05 cents, with support at 71.05 and 70.35 cents. Total volume traded Monday hit 15,192 lots, against the previous 13,723 lots, according to data from ICE Futures US. Open interest rose to 182,120 lots as of January 11 from the prior count of 181,992 lots, the exchange said.