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NYCE cotton corrects after rally, ends shade off

NEW YORK: NYCE cotton futures settled modestly easier Thursday on speculative profit-taking and trade selling as the market pulled back somewhat after a robust rally in the previous session pushed cotton nearly limit up.

"It was way exaggerated," Ernest Simon, vice-president and cotton expert at Prudential Securities, said. "It can't keep going up (like that)."

May cotton retreated 0.83 cent to close at 60.68 cents a lb, and in the bottom half of its 61.40-60.61-cent trading range.

Wednesday, it had jumped 2.98 to close at 61.51 cents a lb, just below the session peak and the three-cents limit up of 61.53 cents.

Spot March fell 0.85 to 58.65 cents. The rest were 0.95-0.15 cent easier.

Cotton gapped lower at the start due to commission-house and trade sales. Speculative profit-taking also dragged the market down, floor sources said.

"We had such a big, fast move yesterday, it was clearly overdone. I think we got some routine profit-taking today," said a broker from the key producing state of Texas.

Market losses were pared somewhat by an increase in the Cotlook Index A futures, which climbed 0.60 to 56.10 cents.

Simon said cotton's pullback is healthy and other traders said this would lay down the foundation for another charge to higher ground.

"I think we're going to take out 62 cents, if not tomorrow then sometime next week," a broker said. "This rally shows that world demand is running at a very good level."

The weekly USDA cotton export sales data showed shipments running at a very healthy level as it stood at 177,700 running bales (RBs).

On a technical basis, dealers said they feel near-term resistance in May cotton would be at 62, followed by 64 and then 66 cents. Support should now be found at 60 cents.

Estimated volume in the NYCE cotton market reached 10,000 lots, against the previous volume of 20,625 lots.

In industry news, showers pelted the key producing area of West Texas with around 0.25-1.25 inches of rain. More rain is expected to hit the area which should enabled farmers there to get the cotton in the ground during spring sowings.

The NYCE is a subsidiary of the New York Board of Trade. -Reuters