Cotton futures ended easier on Thursday on investment fund sales inspired in part by weak commodity markets, but trade and consumer buying pared the losses in fibre contracts, brokers said.
The benchmark July cotton contract fell 0.50 cent to end at 65.99 cents per lb, trading from 65.76 to 66.65 cents. It was an inside day since it was within Wednesday's 65.11 to 67.20 cents band.
The new-crop December cotton contract shed 0.30 cent to finish at 74.64 cents, ranging from 74.09 to 75.07 cents. The contract was also within the Wednesday trading band of 73.79 to 75.50 cents.
Volume in the July contract stood at 12,205 lots at 3:00 pm EDT (1900 GMT) while December volume was at 9,123 lots. "It's not giving up much here," said Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia. She said the ability of cotton to minimise its losses was a bit encouraging, but the next move in the market was hard to forecast given the volatility seen in cotton and other commodity markets these days.
Mike Stevens, an analyst for brokers SFS Futures in Mandeville, Louisiana, said a close in the July contract above 67.20 cents "should trigger a quick test of 68.43 cents" which is a "50 percent correction from last Thursday's high to yesterday's low."
In the December cotton contract, Stevens said a settlement over 75.50 cents should spark "a quick test of 77.15 cents." Separately, brokers said they expect the US Agriculture Department's weekly export sales report to show total US cotton sales anywhere from 200,000 to 220,000 running bales (RBs, 500-lbs each), against sales in last week's report of 197,800 RBs.
US cotton shipments of previously booked orders are seen hitting from 250,000 to 300,000 RBs, versus shipments in last week's USDA data of 268,900 RBs. On a fundamental level, the market is monitoring development of the cotton crop for the 2008/09 marketing year (August/July). Forecasters DTN Meteorlogix said key growing area of Texas should be mostly dry through the weekend and into Monday.
Brokers Flanagan Trading Corp sees support in the July cotton contract at 65.75 and 65 cents, with resistance at 66.40 and 67.50 cents. Volume traded Wednesday in the cotton market hit 24,643 lots, exchange data showed. Open interest in the cotton market rose 703 lots to 269,446 lots as of May 28, it said.
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