NEW YORK, Jan 10: US cotton futures gave up earlier gains in late on Friday trade, with some players preparing for bearish estimates from the US Department of Agriculture’s monthly supply/demand report next week, brokers said.

The key March cotton contract lost 1.10 cent, or about 2.18 per cent, to close at 49.32 cents per lb, but not before setting a fresh peak at 50.90, a level last visited on Nov. 5. The session low was 49.18 cents.

Thursday’s volume for March futures came to 7,584 lots at 3:41 p.m. EST (20:41 GMT), down from 8,103 lots around the same time on Thursday.

We went up for no good fundamental reason. It was like it rose on technical air. I think the market started to anticipate those (USDA) numbers on Monday, and I don’t think they will be friendly at all,” said Keith Brown of brokers Keith Brown and Co. in Moultrie, Georgia.

On Monday at 8:30 a.m. EST, USDA releases its updated estimates for cotton supply and demand.

Analysts said the USDA will be revising individual country balance sheets in their world portion of their update with both the production and consumption outlooks likely to be lowered.

I think US exports will get cut and global consumption will go down reflecting the global recession, Brown said.

The question would be whether the late heavy sell-off was enough to account for any bearish reading in USDA’s report.

Earlier, cotton made moderate gains on follow-through buying by funds after this week’s commodity index reweighting.

Buyers also continued to add to cotton positions following unexpectedly large weekly export sales figures released by the USDA on Thursday.

Also on Thursday, a poll conducted by Reuters at this week’s annual Beltwide Cotton conference in San Antonio showed forecasters look for a steep drop in 2009 cotton plantings, down from 2008’s 25-year low acreage.

Strong technical signals also helped propel prices up early, though chartists said overbought readings rendered the latest rally precarious.

Eventually, prices fell to profit takers as well as skeptics about the supply/demand outlook, brokers said.

Broker Flanagan Trading Corp said it saw support in the March contract at 48.95 cents, then 48.0 cents. Resistance was pegged at 50.90 cents, followed by 51.45 cents.—Reuters