NY cotton ends lower after initial surge fades

NEW YORK: Cotton futures finished easier Thursday on late investor sales after an early flurry of short-covering faded while the trade digested the results of a key government crop report, analysts said.

The key December cotton contract on ICE Futures US fell 1.28 cents to finish at 96.52 cents per lb, trading from 95.78 to 99.36 cents. The range almost matched the 95.76 to 99.03 cents range on Wednesday.

The market stayed within the wide Tuesday range of 93.72 cents to $1.039.

On Tuesday, the contract finished at 95.80 cents in the lowest settlement for the second position since the middle of September 2010, Thomson Reuters data showed.

Sharon Johnson, senior cotton analyst at commodities brokerage Penson Futures, said cotton got an early boost from strong grains prices.

But investors "gave up the ghost" late when fiber contracts could not extend their advance in light business, she said.

Total volume traded hit almost 11,000 lots, over a fifth below the 30-day norm, Reuters data said.

The USDA figures showed an increase in the forecast for the US 2011/12 cotton crop and small adjustments in estimates for world production and consumption.

Some in the trade felt the USDA estimate of US cotton output at 16.55 million (480-lb) bales, from 16 million last month, was too high. Others said the data reflected the situation at this time and said the numbers are just a starting point for the season.

The cotton market took note of the severe drought in Texas, which is the worst in a century in the state.

Total volume Wednesday hit 11,353 lots, down from the prior session's 18,734 lots, ICE Futures US data showed.

Open interest came to 141,929 lots as of Aug. 10 versus the previous session's 142,543 lots, exchange figures showed.

Copyright Reuters, 2011