NEW YORK, March 19: Cotton futures settled lower on Friday on steady speculative liquidation and the market may grind lower from follow-through sales next week, analysts said. The New York Board of Trade’s key May contract shed 0.39 cent to conclude at 50.94 cents a lb, in a band from 50.60 to 51.75 cents. July was flat at 52.50 cents. Except for one contract, the rest fell 0.25 to 0.45 cent. The market’s still a little bit woozy in here, said Keith Brown, president of commodity firm Keith Brown and Co. in Moultrie, Georgia. He said the market has likely taken a short breather and will likely lose further ground because it needs to get rid of “the excess baggage” accumulated from its recent rally to 9-month highs. Fundamentally, cotton futures should eventually head north because of strong demand from a buoyant global economy and lower plantings in the upcoming 2005/06 season from countries like the United States.

Futures popped higher at the start but came under immediate pressure from speculative players dumping their contracts, brokers said.

Trade buying and short-covering by small speculators led the market back so it could finish the session in marginally positive ground, they said.

I believe the seasonal highs are in place for the May contract and possibly for the July but I need to see how well it responds to key support before going out on that limb, said Sharon Johnson, cotton expert for Frank Schneider and Co. Inc. in Atlanta, Georgia.

She said a 38 per ent pullback of the rally would be 50.38 cents, basis May, and a 50 per ent would be at 49.10 cents.

Brokers Flanagan Trading Corp. said support in the May contract was at 50.80 and 50.20 cents, with resistance at 51.70 and 52.50 cents.

Floor dealers pegged estimated volume at 12,500 lots, versus the previous 27,929 lots. Open interest in the cotton market fell 3,674 contracts to 122,453 lots as of March 17. —Reuters