United States Of America : Cotton Showed Light Sales In Slow Trade

Light sales and slow trade resulted NYCE cotton with soft finish last week.Key July cotton shed 0.48 cent to close at 55.50 cents a lb, trading 55.45-56.10.

Spot May eased 0.20 cent to 54.10 cents. Except for two contracts, the rest retreated 0.40-0.60 cent."It's like watching paint dry," said Keith Brown of commodity trading firm Keith Brown and Co in Moultrie, Georgia.

"The market is treading water and is occasionally going under." Futures made a brief stab at the day's highs prior to gradually losing ground from speculative and fund sales in the market, floor sources and brokers said.

Off the lows, modest amounts of buying by trade accounts propped up futures in lethargic business, they said.

The market took note of news from the International Cotton Advisory Committee (ICAC) which raised its forecast for 2003/04 world cotton production to 21.13 million tonnes, from the 20.85 million it estimated last month.

It said world cotton consumption was pegged at 21.07 million tonnes, up 40,000 tonnes from last month. ICAC said global cotton prices as measure by the Cotlook A Index should average 61 cents/lb, down 2.0 cents from its April forecast.

The weekly report by market analyst O.A. Cleveland said some merchants are seeking to sell cotton given fears about the impact that Severe Acute Respiratory Syndrome (Sars) will have on cotton demand.

Cleveland said the market's "attempt to deal with this new 'reality' is to move lower" and added there is the "potential for another 100-point loss in the old crop July contract."

The July/December spread has flared out to nearly 400 points and Cleveland feels it would be "difficult to expect July to sustain a rally beyond 58 cents."

"December, however, is finding good support in the 59 cents area as US and international weather concerns, given the prospect of decade-low (cotton) stocks, provide excellent support," he explained.

Technicians said they believe support in the July contract would be at 55 and 54.20 cents, with resistance at 56.10 and 56.25 cents. Final estimated volume reached 6,000 lots, from the prior tally of 11,755 lots. Total open interest in the cotton market climbed 162 lots to 70,373 contracts as of May 1.