New York cotton settles mixed

NYCE cotton futures ended mixed Friday after a largely expected USDA export sales report failed to spark a rally in fiber prices and traders turned to liquidate March cotton ahead of its first notice day, dealers said.
"We opened with follow-through buying after the USDA numbers came out this morning, but then it just turned into a free-for-all in the March contract at the end of the day," said one trader.
March lost 0.20 cent to finish the session at 67.69 cents a lb, after trading from 67.25-68.80 cents. Most active May rose 0.48 cent to 70.26 cents, while deferred months closed from down 0.40 to up 0.61 cent a lb.
In its weekly export sales report, USDA said US net upland cotton sales reached 566,700 running bales (RBs, 500-lbs each), compared with sales last week of 703,100 RBs.
Shipments hit 287,100 RBs, versus 348,400 RBs the prior week.
China, the world's largest cotton-consuming nation, was again the primary buyer, purchasing 309,200 RBs of US net upland cotton for delivery in 2003/04.
China has emerged as a huge buyer of US cotton after its crop was damaged by severe weather.
During its annual outlook forum Friday, USDA predicted that mill use and exports of US cotton will decline in the 2004/05 marketing year.
"Record world production, an increase in world stocks, and US ending stocks anywhere from 4.2 to 5.3 million bales is very bearish to the market ahead," said one analyst.
Most market operators did not foresee as strong sales figures in the weeks ahead.
"We sold a lot of cotton over the last couple of weeks and everybody is about full, so it's setting up for a classic buy the rumour, sell the fact, said Alan Feild of iamhedged.com in Memphis, Tennessee.
The March/May spread continued to be very active ahead of first notice day in the March future on Monday, February 23.
"It seemed like everyone was getting out of their March positions near the close today," said one trader.
Brokerage Flanagan Trading Corp saw resistance in the March contract at 68.30 and 69.00 cents, while support was placed at 67.50 cents.
Floor dealers said estimated final volume reached about 25,000 lots, compared with Thursday's official count of 23,205 lots.
Open interest was unchanged at 80,483 lots as of February 19.