Cotton futures finished easier Wednesday on investor profit-taking after hitting a near two-year peak, and analysts feel fibre contracts would need to hand back more of its gains following its recent rally. The benchmark May cotton contract declined 0.61 cent to end at 79.16 cents per lb, dealing in a 100-point band from 78.54 to 79.54 cents.
On Tuesday, the contract touched a session peak at 80.10 cents, the highest level since April 2008 for a second month contract in US cotton. Volume traded in May was at 8,697 lots at 2:36 pm EST (1936 GMT). "We were due to back off," said Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia. "It is very overbought." She said the correction is only modest so far and a retreat of 3.0 to 5.0 cents seems in order for a cotton market whose surge has vaporised mill interest in the market. Analysts said the extent to which demand has been left behind by the market should be seen in the weekly export sales data due Thursday from the US Agriculture Department.
Cotton brokers believe total US cotton sales will range from 150,000 to 200,000 running bales (RBs, 500-lbs each), from 373,400 RBs in last week's report. US cotton export shipments are expected to show little improvement. They are expected to range from 200,000 to 230,000 RBs, versus shipments last week at 218,700 RBs.
Brokers Flanagan Trading Corp sees resistance in the May cotton at 79.50 and 80.35 cents, with support pegged at 78.45 and 77.20 cents. Volume traded Tuesday in the cotton market was at 18,049 lots, from the previous 16,445 lots, according to data from ICE Futures US Open interest in the cotton market stood at 167,690 lots as of February 23, versus the prior count of 165,649 lots, the exchange said.
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