NYCE cotton futures settled Tuesday at a 7-week low on options-related and speculative sales after the holiday weekend, with players uncertain about the market's next move in the days ahead, analysts said.
The cotton futures and options market was shut Monday for US Memorial Day.
July cotton sank 2.96 cents to close at 58.23 cents a lb, ranging from 61.50 to the 3.00-cent limit down at 58.19 cents. For the spot month, it was the lowest close since trading around 57.30 cents in mid-April.
December slipped 0.86 to 58.16 cents.
The rest lost 0.75 to 2.00 cents. "The trade just did not come into support it," said Frank Weathersby of brokers Affinity Trading in Fort Walton Beach, Florida.
Floor dealers said aggressive options-related sales by a major cotton merchant combined with speculative fund sales to deflate fiber contracts.
Analysts said July may see follow-through pressure on Wednesday but contracts like new crop December apparently saw better support in the ring and could rebound.
The market took note of the debut of China's new cotton futures at the Zhengzhou Commodity Exchange. The November contract closed at 14,670 yuan a tonne, having ranged from 14,350 to 16,000 yuan. Combined volume traded for the Chinese cotton contracts stood at 3,244 lots.
Brokers Flanagan Trading Corp said in a daily report the first day of business "is probably indicative of nothing, but this contract should be used to hedge forward positions once it gets established."
Analysts here said a ban on foreign investors could limit liquidity in the contracts, but they would allow Chinese textile mills to lower costs by possibly bringing costs in line with global market levels.
Technically, brokers said they feel support in the July contract would be at 56.65 cents. Resistance was pegged at 58.30 and 58.65 cents.
Floor dealers said estimated final volume reached 16,000 lots, versus the previous tally of 11,639 lots. Open interest in the cotton market rose 29 to 81,285 lots as of May 28.