Cotton futures finished lower on Wednesday on investor sales but trade and consumer buying helped the market rebound from a keyy support area, analysts said The benchmark May contract on ICE Futures US fell 0.90 cent to finish at 87.14 cents per lb, dealing from 87.05 to 88.59 cents.
Volume traded during the day came to nearly 15,000 lots, almost 40 percent under the 30-day norm, Thomson Reuters data showed. "We're still under (the gun) from these bearish fundamentals," said Mike Stevens, an independent analyst in Louisiana, referring to a steady rise in production and weakening consumption of the fibre. The US Agriculture Department recently increased its world 2011/12 cotton production forecast to 123.64 million 480-lb bales from 123.34 million, and cut its projection of world consumption to 108.72 million bales from 109.71 million.
It upped its forecast of world end-of-season stocks to 62.32 million from 60.77 million bales. The 2011/12 marketing year ends on July 31. Technically, speculators tried to press the May contract below the March 12 intraday low of 87.01 cents to see whether automatic sell orders could be hit under the 87 cents area, which has held since late December 2011.
"The specs are trying to push it below support and get to those stops," a dealer said. The market will await the USDA's weekly export data on Thursday to gauge whether cotton sales remain robust, especially to top consumer China, the leading buyer of US cotton.
The fibre trade is also waiting for news from India, which is prohibiting fresh cotton exports after a week of policy disputes. India is the world's No 2 cotton producer and the biggest exporter after the United States. In two weeks, the market will be looking at the USDA's annual potential plantings report, which will set the table for US cotton sowings in 2012.