NEW YORK, Aug 27 (Reuters) - U.S. cotton futures slid almost 1 percent on Tuesday, giving back gains made a day earlier as prices traced out a sideways pattern after last week’s 10-percent rout.
“Merchants are not doing a lot right now. There was some producer selling above the market, but not a lot this week,” said Sharon Johnson, cotton specialist, Knight Futures in Georgia. “We’re in a kind of no man’s land.”
Benchmark December cotton contracts on ICE Futures U.S. closed at 84.15 cents a lb., down 0.75 cent or about 0.85 percent. Volume for the contract was healthy at 11,461 lots.
Mills are expected to show buying interest as prices dip below 84 cents and especially below 83 cents. Cotton has held above 83 since early June and above 81.35 cents since February.
“Buyers have pulled away from the market and will wait for some kind of bottom to form before buying in a big way,” said Jack Scoville, commodities expert at The Price Futures Group’s daily report in Chicago.
In the broader markets, cotton was facing headwinds from falling grains markets. U.S. corn and soybean futures fell as forecasts for slightly wetter-than-expected weather across the U.S. Midwest prompted a round of profit-taking.
The U.S. Department of Agriculture’s weekly crop progress report released late Monday showed cotton’s condition improved slightly, with 47 percent good to excellent, up from 46 percent a week earlier, and 43 percent a year ago.
Cotton’s progress lagged, however, with only 10 percent of the bolls open, up from 8 percent a week ago, but half of the five year average at 20 percent.
“The crop is running a couple of weeks behind in terms of development, that makes it vulnerable at harvest,” said Johnson.
Adverse October weather has the potential to hurt a cotton crop already crippled by lack of rains that led to abandonment of 40 percent of the acreage in some growing regions. U.S. cotton supply is already low.
Cotton needs a certain number of hot days to mature. The longer the bolls take to develop fully the greater the chances of damage by cold, wet weather at harvest time.
In the meantime, analysts said they expect futures to continue moving sideways, possibly until the USDA releases its next agriculture supply/demand report on Sept. 12. (Reporting by Carole Vaporean; Editing by Alden Bentley)