NEW YORK, Feb 16: NY cotton futures finished lower on Friday as funds were seen evening up their books ahead of the long holiday weekend, traders said.

The cotton market will be closed Monday in observance of the US Presidents Day holiday. Business will resume on Tuesday.

Locals got long early, then bailed out. That’s what caused that first break today. Then they got short and had to cover some of those shorts late in the day, said a floor source.

March cotton lost 0.74 cent to 35.57 cents a lb, trading from 35.40-36.27 cents a lb.

May closed 0.73 cent lower to 37.08 cents, ranging from 37.05 to 37.90 cents a lb.

The rest of the board finished Friday 0.25-0.85 cent weaker.

The market is re-tracing back to the 30-year lows set in late October. On a weekly close basis, today’s close of 35.57 cents was the lowest since Nov. 23 of 33.82 cents a lb., said Sharon Johnson, cotton expert for Frank Schneider and Co. Inc. in Atlanta.

The funds are still very, very long this market. Now if the market gets slow enough, we start seeing massive liquidation by the funds with market orders, like today on the close, they sold 500 contracts, and I really don’t believe that, despite today’s very good trade buying, that we’ll have contracts waiting to be bought by the trade below the market, Johnson added.

Traders noted that fund rolling of March cotton into May continued to play out ahead of first notice day in March on February 22.

The March/May (spread) widened during the course of the day, towards 170 (1.70 cents), though it had narrowed from that on the close, a floor source said.

Open interest in March slipped 2,582 to 10,402 lots, while that of May fell only 59 to 22,692 lots.

The market is setting itself up for a test. We’re on the low side of this range, so if this has any validity, we’re going to need to start moving up from here, said Keith Brown, president of commodity firm Keith Brown and Co. in Moultrie, Georgia.

We’re just going to have to see what happens next week, Brown said.

Estimated final volume reached 13,676 lots, against the previous 16,659 contracts.

Brokers Flanagan Trading Corp. place resistance in March cotton at 36.50 and 37.10 cents, while new support is seen at 35.70, then 34.70 cents a lb.

Open interest in the cotton market as of February 14, fell 2,080 lots to 63,305 contracts from the prior session.—Reuters