YORK, June 14: NY cotton futures ended lower Friday on a lack of follow-through buying and profit-taking in the market, with analysts saying cotton may correct a bit after surging to a six-week high this week.
July cotton lost 0.63 cent to finish at 55.04 cents a lb, moving between 54.80 and 55.55 cents. On Thursday, the contract closed at 55.67 cents in the highest close for cotton on a spot basis since ending at 55.75 cents on April 28.
December declined 0.53 to 59.03 cents.The rest slipped 0.45-0.55 cent.
You just did not have any follow-through buying, said Sharon Johnson, cotton expert of Frank Schneider and Co. Inc. in Atlanta.
She added that market participants who had run the market to its highest level in 1-1/2 months probably (did) some profit-taking in cotton futures.
Contracts fell from the opening bell, when the buying which hoisted cotton up stalled, prompting speculators to dump their positions and bank their profits, brokers said.
Cotton futures had hit a six-week high after a surprisingly friendly USDA monthly supply/demand report, options-related activity, news of crop losses in the key growing area of Texas, and poor conditions in the US Delta.
Brokerage Flanagan Trading Corp. in North Carolina said the market is overbought on a short-term basis.
Marketing analyst O.A. Cleveland said in his weekly report that the new crop December cotton contract should head higher in the coming weeks.
December is headed first for a challenge of 63 cents, then 65 cents, he said, adding the market would need to contend with US cotton losses in areas from West Texas to the Carolinas.
Cleveland said US mills were also very aggressive in fixing new crop prices in the March, May and July 2004 cotton futures contracts in a sign they expect a significant price rally.
Technicians see resistance in the July contract at 56.40 and 57.40 cents while support would be at 54.60 and 54 cents.
Final volume reached around 13,000 lots, down from the prior count of 22,376 lots. Total open interest in the cotton market fell 5,016 lots to 74,597 lots as of June 12. —Reuters
