Cotton futures closed lower on Tuesday as fibre contracts dawdled while waiting for fresh leads and analysts are mulling the next move of a market that recently hit a 3-1/2 month high. ICE Futures US benchmark December cotton contract lost 0.16 cent to finish at 83.86 cents per lb. The contract traded from 83.76 to 84.39 cents.
-- Asian demand strong, but technicals looking stale
It was an inside day since the range was within Friday's 83.75 to 84.79 cents band. Volume traded in the December contract hit 7,172 lots at 2:30 pm EDT (1830 GMT). Total volume traded at 2:31 pm was at 10,361 lots, much lower than the 30-day average of 15,474 lots, preliminary Thomson Reuters data showed. "The market's pondering what it wants to do," said Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia.
He said it is difficult to say if cotton can even summon the ammunition to challenge the 2008 high over 92 cents. Trading beyond that level would be the highest since 1995. "If we don't break hard, maybe we try to go up one more time," said Brown. Analysts said ideas on strong demand from China and Pakistan has been factored in by the trade, but news that India has eased cotton export controls would add to supplies in the market.
"(The) market looks tired," said Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana. He added that automatic sell order stops could be found below 83.23 cents, basis December, the low of last Friday. Brokers Flanagan Trading Corp put resistance in the December contract at 84.55 and 85.55 cents with support pegged at 83.60 and 82.75 cents.
Volume traded Monday hit 11,613 lots compared with the previous tally of 25,701 lots, ICE Futures US data showed. Open interest in the No 2 cotton market was at 206,567 lots as of August 16 versus the previous 204,495 lots, the exchange said.