US cotton futures finished lower on Wednesday for the second straight session on investor liquidation although the market managed to hold the lower end of its trading range, analysts said. The key March cotton contract on ICE Futures US declined 3.93 cents or 2.72 percent to finish at $1.4043 per lb, moving from $1.4038 to $1.4635.
-- Trading volume thin as players brace for end of 2010
Volume was seen around 12,800 lots, about 50 percent below the 30-day norm, Thomson Reuters preliminary data showed. The cotton market is one of the best performing commodities in the Reuters-Jefferies commodity index, up almost 75 percent year to date as the market rallied to hit levels that have not been seen since the US Civil War in the 19th century.
"We're trying to break out on the downside," said Mike Stevens, an independent cotton analyst in Mandeville, Louisiana. "It's (the cotton market) is trying to confirm the direction is down." Traders said many investors have fled their desks and will not be back until after the New Year. Those who remain are content to maintain or defend outstanding positions in cotton futures.
Cotton prices in China were slightly softer, with May futures on the Zhengzhou Commodity Exchange last traded at 27,645 yuan per tonne, down 100 yuan on the day. Analysts said the market will be looking toward the US Agriculture Department's weekly export sales report due out on Thursday to gauge how much demand there is going forward for US cotton.
Cotton brokers expect total US cotton sales to range from 150,000 to 250,000 running bales (RBs, 500-lbs each) as business thinned out due to the Christmas holidays. Last week, total US cotton sales stood at 405,400 RBs.