Cotton futures settled lower on Wednesday on sales by small investors as the market treaded water in range-bound dealings, with more of the same trading pattern expected this week, brokers said. The key May cotton contract fell 0.67 cent to end at 81.17 cents per lb, dealing from 80.86 to 81.90 cents. The range stayed within Tuesday's 80.11 to 81.95 cents band.
July cotton shed 0.40 cent to finish at 81.99 cents. New-crop December lost 0.52 cent to end at 74.55 cents. Volume traded in the May contract was at a modest 5,543 lots at 2:45 pm EDT (1845 GMT). "We're range-bound for a little while," said Jobe Moss, an analyst for brokers and merchants MCM Inc in Lubbock, Texas. Analysts said the key May cotton contract is moving in a band running from 78 to 84 cents, and there seems little in the way of upcoming news to break that band.
Moss believes the May contract could take another shot at getting below 80 cents. But dealers said there is good support there from trade and mill accounts. Moss and other analysts said this could well be the trading band for cotton until the US Agriculture Department hands out its annual potential plantings report on March 31. Cotton brokers said the USDA's weekly export sales report due out tomorrow should show total US cotton sales at 100,000 to 200,000 running bales (RBs, 500-lbs each), from 165,400 RBs in last week's data. Brokers Flanagan Trading Corp sees resistance in the May cotton at 81.40 and 82.65 cents, with support pegged at 80.35 and 79.50 cents. Volume traded Tuesday in the cotton market was at 14,063 lots, from the previous 10,203 lots, according to data from ICE Futures US.
Open interest in the cotton market stood at 185,387 lots as of March 16, versus the prior count of 184,861 lots, the exchange said. Abundant snow and rain this winter have boosted soil moisture levels across the US cotton belt, guaranteeing a robust start to the crop in 2010. The government and most farmers expect US 2010 cotton sowings to rebound to around 10 million acres because of higher cotton prices and prospects that demand will increase as the global economy recovers.