New York cotton crawls to mixed finish

Cotton futures settled mixed Tuesday as investors tweaked their positions ahead of a holiday break and the market consolidated gains sparked by a government plantings report last week, analysts said. The market will be shut Wednesday for the US Independence Day holiday. Trading resumes on Thursday.
The New York Board of Trade's key December cotton contract added 0.05 cent to close at 63.48 cents per lb, moving from 63.10 to 63.88 cents. One contract aside, the rest ranged from 0.10 cent up to 0.20 cent lower. IntercontinentalExchange's NYBOT electronic cotton market showed the December contract up 0.02 cent at 63.45 cents at 2:23 pm EDT (1823 GMT). "We're consolidating the gains and we're waiting to see" if demand comes up in the market, said Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana.
The market jumped sharply following the release of last Friday's US Agriculture Department annual plantings data which pegged US cotton sowings in 2007 at an 18-year low of 11.1 million acres.
Based on expected harvested cotton acreage and a yield of 820 lbs/acre last year, the US cotton crop may reach only 16.8 million (480-lb) bales, down sharply from the June USDA production report estimate of 18.8 million bales. In 2006/07, the US harvested 21.59 million bales of cotton.
Stevens and other brokers said most commercial players and possible buyers of cotton were hoping for a price dip to do their hedges but have not been able to do so given the strength in the new-crop December cotton contract. "Everybody and their dogs are hoping for a dip," said Stevens, adding the impetus for the move higher came from electronic cotton trade.
Analysts said the market will look at the demand equation when the weekly USDA export sales data is released on Friday. After that, the trade will turn its attention to the monthly USDA production report to see what kind of impact the plantings data will have on US cotton output for 2007/08.
Brokers Flanagan Trading Corp sees resistance in the December contract at 63.50 and 64.10 cents, with support at 62.75 and 62 cents. Open interest in the cotton market was at 207,862 lots as of July 2, up 3,670 lots from the previous session, exchange data showed.