Cotton futures settled on Monday near an 8-week low, dogged by another round of technical sales amid predictions that the weak tone meant lower prices yet in the days ahead, brokers said. "It's a sad puppy," said Mike Stevens, an analyst for SFS Futures in Mandeville, Louisiana. "It's been in a slow, deteriorating stage all day."
The key March cotton contract dropped 1.11 cents to finish at 69.96 cents per lb, dealing from 69.81 to 71.65 cents. It was the lowest level for cotton on the spot daily charts since December 2, 2009. Volume traded in the March contract hit 11,738 lots at 2:33 pm EST (1933 GMT).
The market tried to hold its ground through most of the session, but technical pressure and liquidation knocked the March contract below the key 70 cents level, dealers said. Cotton futures are down more than 600 points, or 6.00 cents from a peak at 76.77 cents on January 4.
Trade and possible mill fixation buying pared the market's losses but the short-term momentum is clearly down and there seems to be little appetite to buy cotton at this time, analysts said. "Business gets done," said Stevens, adding that the weakness of the market would prompt many players to hesitate about taking positions in cotton.
They will "back-off" until the market stabilises. "Fundamentals really haven't changed as mill buying to fix the prices of on-call transactions still outnumber potential selling by producers by 7 to one and US cotton is sold for export nightly," Stevens said in a report.
Brokers Flanagan Trading Corp sees resistance in the March contract at 70.35 and 71.05 cents, with support at 69.50 and 68.60 cents. Total volume traded Friday hit 12,055 lots, against the previous 13,074 lots, according to data from ICE Futures. Open interest in the cotton market stood at 173,247 lots as of January 22, from the prior count of 173,626 lots, the exchange said.