NEW YORK, Aug 9: NYCE cotton futures finished on a stronger footing on Friday, recouping some of its steep losses from a day earlier, but with most participants waiting for USDA’s crop report on Tuesday, traders said the light action centred around locals.

“Very low volume. We’re just waiting on the (USDA supply/demand) numbers to come out on Tuesday morning. Speculators were the main feature today. They were trading on both sides,” said Keith Brown of Keith Brown and Co.

“It was mostly locals. That’s why the price range got a bit exaggerated at times. There was not enough volume,” he added.

December cotton fell 0.39 cent to close at 58.07 cents a lb, after trading in a 57.65 to 58.40 cents range.

Next most-active March cotton lost 0.44 cent to settle at 60.65 cents a lb. The rest rose 0.20 to 0.65 cent by the close.

Final cotton volume was estimated at 3,479 lots on Friday, less than Thursday’s 5,577 lots.

Traders said domestic fundamental factors are generally favourable and helped keep a bid tone under cotton prices on Friday. But, they added that the price gains were tempered by export fundamentals that are seen as mixed at best.

“Fundamentals are still bullish, but the market is not really responding. Supply fundamentals are bullish, that is to say, it’s too wet in the South and its hot and dry in West Texas,” Brown said.

But, he and others said the stronger dollar inhibits purchases by overseas buyers. In addition, a change in the Step 2 crop subsidy that the US government pays to shippers fell from seven or eight cents to under two cents since the new 2003/04 crop year began on August 1.

One trader said the new lower subsidy should slow export shipments, which are already slow this time of year.

“So, domestic fundamentals may be friendly. But what I call international fundamentals aren’t so friendly at the moment. So, that’s why the market has a lot of these see-saw days. It’s waiting for something to come along,” said Brown.

Traders said that “something” should come along on Tuesday with the USDA’s August supply/demand report. Participants will be waiting to see if it shows a largely-anticipated decline from its last release. USDA last pegged 2003/04 US cotton output at 16.6 million bales.

Unlike the July report, USDA’s August supply/demand report is reportedly based on an actual crop survey and will therefore be closely watched for direction.

Many traders said they think Monday should be even slower than Friday and the range even tighter as the market waits for the August supply/demand report.

“That will be interesting to see, because at the beginning of July the crop was in pretty good shape. That is, production looked very promising. Then Texas experienced one of the hottest, driest July’s in recent history,” said Brown.

“But the market still decided to come down anyway. So, its hard to know what the market’s got its mind on,” he added.

Technicians said they are now looking at support at 57.40, 57.10 and 56.50 cents. Resistance for December cotton is seen at 58.15, 58.50 and 58.80.—Reuters