NEW YORK, Dec 20: NY cotton futures closed marginally easier on Wednesday on speculative pressure caused by a higher estimate of China’s cotton crop, but trade and mill buying pared the initial losses posted by the market.

Key March cotton fell 0.36 cent to settle at 36.45 cents a lb, in the top half of its 35.25-36.50 cents trading range. May lost 0.31 cent to end at 37.89 cents. Back months slipped between 0.25-0.50 cent.

Cotton seemed to be trading in a range as it continued to recover from falls to near 30-year lows in October, with operators undecided about the market’s next move.

I think the tone was very volatile, but thin, said Alan Feild, an analyst for brokers STA Trading Services in Memphis, Tennessee.

Cotton was sold by speculators at the start after news that China’s cotton crop was estimated by the semi-official China News Service at 5.32 million tons this year, the largest in a decade and the third biggest in 50 years.

Chinese cotton production last year stood at 4.35 million tons, according to the State Statistical Bureau, which declined comment on the report.

The initial wave of selling was met by solid mill fixation buying at the lows along with option-related, local and speculative shortcovering.

He said that without the Chinese news, the volume traded in the market could have been easily smaller than the 3,506 lots tallied in Tuesday’s trade.

Estimated final volume reached 8,000 lots.

Traders said the failure of the US Senate to push through a Farm Bill may be supportive in the long run for the cotton market because it may take some acres out of the sector.

We might lose some acres because we don’t have a Farm Bill, one stated, adding most farmers sowing cotton were heavily dependent on the farm subsidies expected to be included in the new legislation.

On another matter, brokers said the weekly USDA export sales data due out Thursday should continue to showcase robust US upland cotton sales.

They pegged it between 200,000 and 250,000 (480-lb) bales, against the prior week’s new upland sales of 260,800 bales.

On a technical basis, analysts said they feel support in the March cotton contract would be at 35 and 34.70 cents while resistance would be at 37 and 38 cents.—Reuters