New York cotton settles lower-Texglobe

NEW YORK (July 03 2010): Cotton futures closed on Friday near a month low on investor sales and analysts said the market is close to a technical level it must hold to prevent further losses after a holiday weekend. The cotton market will be shut Monday in observance of US Independence Day. Trading resumes on Tuesday. The key December cotton contract dropped 0.92 cent, or 1.2 percent, to finish at 75.53 cents per lb, the lowest finish in nearly a month, according to Thomson Reuters data.

The contract traded from 75.40 to 76.87 cents. It was an inside day since the range was within Thursday's 75.17 to 77.26 cents band. Volume traded in the December contract stood at 9,637 lots at 2:30 pm EDT (1830 GMT). Mike Stevens, analyst for brokers SFS Futures in Mandeville, Louisiana, said the December contract would need to hold the 200-day moving average at 75.13 cents and then 75 cents or else it would be "bombs away" on cotton futures. On Thursday, the contract approached that level by reaching 75.17 cents before rebounding.

Analysts said that with the US Agriculture Department's annual planted acreage report now out of the way, they would want to take a look at the likely impact of the data on the USDA's monthly supply/demand report and its estimate of the US cotton crop for the 2010/11 marketing year (August/July). USDA pegged US 2010 cotton sowings at 10.9 million acres, the most since 2006 when 15.274 million acres were sown to cotton. Plantings of that size would mean a cotton crop of 17 million and possibly 18 million (480-lb) bales, the highest since the US harvested 19.2 million bales in 2007. Brokerage Flanagan Trading Corp sees support in December at 75.10 and 74.25 cents, with resistance at 76.15 and 77 cents.

Volume traded Thursday reached 20,256 lots, from the prior tally of 19,967 lots, ICE Futures US data showed. Open interest in the No 2 cotton market was at 162,668 lots as of July 1, compared with the prior 164,188 lots, the exchange said.