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NYCE cotton ends easier in see-saw trade

NEW YORK: NYCE cotton futures finished slightly lower on Friday due to speculative liquidation, although trade buying and mill fixations blunted downside pressure as funds gradually eliminated their long positions.

March cotton ended off 0.01 cent at 56.08 cents a lb after trading 56.40-55.21 cents. May slipped 0.03 to 57.69 cents. Back months closed 0.30 lower to unchanged except for July which gained 0.11 to 58.95 cents.

"We had a pretty wild day and we saw another washout of the funds," a cotton broker in Tennessee said.

After gapping to the top of the range at the start, a combination of trade selling, a lack of buying and sales by small speculators rolle the market back down, floor brokers said.

Memphis-based STA Trading Services said speculative buying of 200 contracts just below 56 cents was not enough to stop the fall in futures.

"Once it was realised how easily the buying was absorbed, the market immediately made significant lows," STA said, adding that news seems not to affect the market much at all since it was engaged in speculative long liquidation.

Traders estimated the funds, which the weekly NYCE spec/hedge report had said was net long by 41.1 percent, had probably trimmed their net long standing to around 32 percent by the end of the week.

"We think they liquidated about 6,000 lots this week," one broker said.

"They've done some liquidation, but I think they still have some stuff to get rid," a floor analyst said.

The only bit of news the market is waiting for is the release in Washington of U.S. cotton planted acreage by the industry group National Cotton Council.

Most dealers expect the NCC to calculate U.S. cotton plantings in 2000/01 between 14.5-15.5 million acres.

The USDA, in a preliminary estimate at the annual Beltwide Cotton conference last month, pegged it at 14.5-15.0 million acres.

William Dunavant, chief executive of leading cotton merchant, estimated at the same conference that cotton sowings would reach 14.9 million acres.

Memphis-based analytical firm Sparks Cos. was said to have forecast cotton plantings last month at 15.43 million acres, according to industry sources. Sparks officials had no comment on the reported release of their figures.

All of the estimates were up on plantings in the previous season, which the USDA said reached 14.6 million acres.

Technically, dealers said they feel resistance in March cotton should be at 58 cents whilst support will likely be found at 55 cents.

The nine-day relative strength index (RSI) of March cotton stood at 34 at the close Friday, from 34 previously.

An RSI figure of 70 or higher normally meant the market is overbought while one of 30 or below is usually seen as being oversold.

Volume reached an estimated 14,000 lots, against the previous volume of 15,874 lots. -Reuters