US cotton futures settled sharply lower Thursday on investor profit-taking as the market seemingly took a breather after its recent advance, with players mulling the next move in cotton before the weekend. The key July cotton contract on ICE Futures US dropped 4.21 cents to close at $1.5565 per lb, dealing from $1.5386 to $1.6132.
New-crop December fell 3.79 cents to finish at $1.1919, moving between $1.1698 and $1.2339. Volume stood around 12,300 lots, about 45 percent below the 30-day norm, Thomson Reuters preliminary data showed.
"It was time to take some profits," said Mike Stevens, an independent cotton analyst in Louisiana. Traders said the new-crop December contract finally hit a target around $1.23 or higher during the session and then tumbled shortly afterward.
The same seemed to be true of spot July, which filled in the area between $1.58 and $1.60 by springing to the session high at $1.6132 and then getting hit by technical profit-taking.
Analysts said cotton players still must contend with a possible squeeze in the July contract because of tight deliverable supplies. December and the back months in turn are propped up by a drought savaging cotton crops in Texas, the biggest cotton growing state in the country. Aside from Texas, another drought-stricken area is southern Georgia, the second biggest cotton growing state here. Farmers along the swollen Mississippi also have to contend with severe floods, which have drowned thousands of acres of cotton.
Some pressure also came from the US Agriculture Department's weekly export sales report, which showed cancellations of cotton sales, the 8th straight week such sales were called off. Volume traded on May 18 stood at 14,848 lots, according to ICE Futures US data. Open interest stood at 150,620 lots as of May 18, data from the ICE Futures US exchange showed. Volume stood at 14,848 lots as of May 18, the exchange said.