Cotton futures finished Wednesday at a fresh near five-month low on investor sales but the market ran into support at its session lows from possible consumer buying, brokers said. The key December cotton contract declined 1.30 cents to end at 73.35 cents per lb, dealing from 73.21 to 74.82 cents. It was the lowest close for the contract since February 24, according to Thomson Reuters data.
Volume traded in the December contract stood at 8,988 lots at 2:30 pm EDT (1830 GMT). Business was on the light side and the December contract seems content to move in a range running from 73 to 75 cents, said Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana.
"It's the summer doldrums," he said. At the lows, suspected consumer buying pared market losses, trading sources said. The running debate in the cotton market is whether the cloudy economic prospects would impact demand, which has been running at a robust level.
Fundamentally, the discussion is whether a large US cotton crop may not be enough if the crop in No 1 consumer China runs into trouble during the northern hemisphere summer. The market will be looking toward the release of the US Agriculture Department's weekly export sales data on Thursday to get a handle on cotton demand with the start of the 2010/11 season coming up. Cotton brokers expect total US cotton sales to range from 250,000 to 350,000 running bales (RBs, 500-lbs each), from sales last week of 401,500 RBs.
Brokers Flanagan Trading Corp sees support in December at 73.30 and 72.25 cents, with resistance at 74.25 and 75.10 cents. Volume traded Tuesday reached 13,228 lots, from the prior tally of 12,431 lots, ICE Futures US data showed. Open interest in the No 2 cotton market was at 153,514 lots as of July 13, compared to the prior 155,726 lots, the exchange said.