Cotton futures finished mixed on Tuesday in spread trade, with the weak macroeconomic outlook seen keeping fibre contracts on the defensive, analysts said. Global stocks fell Tuesday after data showed the US economy grew more slowly than expected in the third quarter of 2011, while the euro slipped versus the dollar as investors shunned risk.
The spot December cotton contract on ICE Futures US fell 0.86 cent to finish at 89.95 cents per lb, dealing from 87.50 to 90.75 cents. The most-active March cotton futures rose 0.71 cent to end at 91.12 cents, moving from 89.33 to 92.10 cents. Total volume traded Tuesday hit over 22,000 lots, less than 3 percent below the 30-day norm, preliminary Thomson Reuters data showed.
"That late rally for March cotton back above the key 91.25 (cents) technical area just might be telling us that March is ready to consolidate and correct some of the break from last week's high to today's low," a report by independent analyst Mike Stevens said. He added open interest in the December contract had fallen to such an extent the first notice day for deliveries "might be a non-event." Open interest in the spot December contract stood at 2,999 lots as of Monday. By the close of trade Tuesday, cotton brokers believe open interest in cotton is likely down to 500 to 1,500 lots.
Market participants looked to see whether consumer demand will pick up or whether potential buyers like China, the world's No. 1 consumer of cotton, will hold back and wait for prices to weaken further before booking orders at market lows, analysts said. Last week, the Chinese were the big buyers in the US Agriculture Department's weekly export sales report on Thursday. The next report is due for release on Friday.
Open interest in cotton, usually taken as an indicator of investor exposure in the market, stood at 137,209 lots as of November 21, from the prior session's tally of 138,160 lots, exchange data showed. Total volume traded Monday in the market reached 32,919 lots as of November 21, ICE futures US data said.