Cotton futures closed with small losses on Tuesday on sales by small speculators in thin range-bound trade and the subdued tone in fibre contracts is seen persisting through the end of 2012 with many major players away for holidays, analysts said.
The key March cotton futures slipped 0.29 cent to close at 86.80 cents per lb, dealing from 86.45 to 88.14 cents. The 169 point trading range was almost similar to the 160-point band in Monday's 85.90- to 87.50-cent trading range. Volume traded Tuesday hit nearly 8,500 lots, more than 50 percent under the 30-day norm, Thomson Reuters preliminary data showed.
Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia, said cotton ran up early due to the strength of equity markets and a weaker dollar. But the market turned lower late as interest dried up. "The reality of slow demand and rising (cotton) stocks continues to hang over the cotton market," said Brown. Traders said fund managers and big investors, who are the main drivers in the cotton market, were also absent, having closed their books for the year. "The schedule of holidays means most of the remaining guys are gone by late tomorrow. There are only four trading sessions left next week so there is no incentive to hang around," one said.
Fundamentally, the market is struggling from weak demand caused by fears the debt and budget crisis in the EU and the United States would continue to deflate cotton demand. Total volume traded Monday stood at 5,056 lots, its lowest level since late in 2008, ICE Futures US data showed. On Friday, volume was at 7,021 lots, it said. Open interest in the cotton market, an indicator of investor exposure, was little changed and marginally higher at 148,910 lots as of December 19, from the previous session's 148,427 lots, exchange data showed.