NEW YORK, Aug 2: NYCE cotton futures settled softer on Friday due to modest speculative sales as fibre contracts appear to be drifting waiting for market-moving news, analysts said.

December cotton lost 0.52 cent to close at 57.91 cents a lb, one tick above the session low of 57.90 cents. The intra-day peak was at 58.70 cents.

The next most-active March contract eased 0.62 to 60.43 cents. The rest lost between 0.55-0.60 cent.

“We tested yesterday’s lows with no follow-through,” said Frank Weathersby of brokers Affinity Trading in Fort Walton Beach, Florida.

Brokers said speculative accounts pushed cotton to below 58 cents, basis December, but that trade and speculative buying emerged at that level.

“It just keeps grinding lower, but there is very good trade buying underneath this market,” one said.

Analysts said cotton futures may be sitting back until the USDA supply/demand report is released on Aug. 12.

The USDA is widely expected to raise its estimate for U.S. cotton production to around 16.7-16.9 million (480-lb) bales after weather conditions improved across the U.S. cotton belt.

In its last supply/demand report, USDA pegged US cotton output for 2003-04 at 16.6 million bales.

“The dominant 58-63 cents trading range still rules price activity. Speculative funds appear to be wiling to take the long side of the market and another test of 62 cents appears to be building. However, in the absence of a weather problem, December must wait until September to crack above 63 cents,” the weekly outlook by analyst O.A. Cleveland said.

Technicians see support in the December contract at 57.40 and 57.10 cents, with resistance at 58.05 and 58.50 cents.

Floor dealers said estimated final volume traded reached around 8,000 lots, against the prior tally of 11,740 lots.

Total open interest in the cotton market rose 772 lots to 63,136 lots as of July 31.—Reuters