Cotton futures settled lower Wednesday on investor sales as the market was again pinned in a trading band with players reluctant to take positions in fibre contracts given the debt woes in Europe, analysts said. The key December cotton contract on ICE Futures US eased 0.62 cent to finish at 99.53 cents a lb, dealing between 99.16 cents and $1.01.
For the fourth session in a row, the market basically stayed in a range running from 99 cents to $1.02. Tuesday's range was 99.50 cents to $1.0218, Monday's range was 99.52 cents to $1.023 and the Friday band was at 99 cents to $1.02. Total volume traded Wednesday hit almost 8,500 lots, around a third below the 30-day norm, preliminary Thomson Reuters data showed.
"It's the same tiny range in cotton," said independent cotton analyst Mike Stevens in Mandeville, Louisiana. "We're trapped between spec selling and trade buying, but there's nothing aggressive," he added. Merchants were reluctant to sell cotton because of worries that drought in Texas, the biggest cotton growing state in the country, has hurt the quality of US fibre. The market is still firmly capped at the $1.04 to $1.09 area, but mills and commercial accounts seem eager to book orders under the psychological $1 mark.
Stevens said the market will be looking closely at the US Agriculture Department's weekly export sales report to see if export orders for US cotton are cancelled anew. The report is due out at 8:30 am EDT (1230 GMT) on Thursday.
The amount of investor interest in cotton remained weak as open interest stood at 147,611 lots as of September 27, up slightly from 146,985 lots on September 23, the lowest level since August 29, the exchange said. In fact, the US CFTC said speculators cut their net long position in cotton to 26,937 lots, the lowest since June. Total volume Tuesday amounted to 11,154 lots versus the previous session's tally of 12,568 lots, ICE Futures US data showed.
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