NEW YORK, May 4: NY cotton futures closed marginally lower on Friday because of follow-through speculative pressure, but scale-down trade buying likely tied to export orders pared market losses.

The market’s cheap and it’s oversold, Alan Feild, broker for STA Trading Services in Memphis, Tennessee, said. He added the market had initially tracked lower because of “follow-through weakness” in futures.

Analysts said the prospect of overproduction in the US and the likelihood of bumper supplies in the coming years has kept fiber futures under the gun.

Spot May cotton shed 0.20 cent to close at 31.90 cents a lb. Key July slipped 0.24 cent to end at 33.52 cents, trading 32.85-33.75 cents. Except for one contract, the rest retreated 0.18-0.45 cent.

Brokers said heavy speculative fund selling at the opening bell deflated cotton, with option-related sales shoving the market into sell-stops.

The analysts said market pressure was aggravated by about 1,300-1,500 lots of call sales done along with some put buying in the market.

Mike Stevens of Swiss Financial Services in Mandeville, Louisiana, said local short-covering and a pinch of options-linked buying hoisted futures from its lows.

Feild said scale-down trade buying came in heavily at July’s session low of 32.85 cents and was most likely tied to another round of export orders for US cotton.

A daily commentary by brokers Flanagan Trading Corp. in North Carolina said trade accounts would prefer going into the weekend with lower prices to make additional export sales.

The low prices of last week resulted in large export commitments and this week should be no different, the report said.

For now, cotton market players are waiting for final approval in the US Senate of the Farm Bill already approved by the House of Representatives.

Technically, brokers said they believe support in the July cotton contract will be at 33.20 and 32.60 cents. Resistance would be at 34.55, 35.55 and then 36 cents.

Floor sources said estimated final volume stood at 11,000 lots, from the prior tally of 12,053 lots. Open interest in the cotton market rose 1,311 lots to 68,455 lots as of May 2.—Reuters