"The cotton market basically had a 6.00-cent rally at the end of 2003, and a little 2.00-cent correction today is probably normal and healthy," said one dealer.
March slipped 1.63 cents to end the day at 74.04 cents a lb, after trading from a low of 73.50 to 75.45 cents. May fell 1.53 cents to 75.30 cents. The rest of the board settled down 0.46 to 1.36 cents a lb.
"We have export sales data out tomorrow morning, so there may have been a little profit-taking ahead of those numbers," said one broker.
Cotton brokers said US net upland cotton sales will probably range from 125,000 to 150,000 running bales (RBs, 500-lbs each) compared to the previous week's sales of 89,300 RBs.
"With last Thursday's New Year's holiday, I think that we really won't see much in the way of sales," one said.
As for shipments, brokers said they should reach only 150,000 to 175,000 RBs against the prior week's 175,200 RBs.
"Shipments, unfortunately, will probably continue to lag. Shippers want to ship, but they are having trouble getting space on container ships because there is so much else being shipped right now, whether it's military or non-military," a broker explained.
The rise in the US dollar today was another reason given for the decline in cotton prices.
"The US dollar was up 60 points today and may have put in an interim bottom," said Keith Brown of Keith Brown and Co in Moultrie, Georgia. A firmer US dollar may discourage foreign buyers of US cotton, as the dollar-denominated purchases of the fibre increase.
Analysts see resistance in the March contract at 75.90 cents, while support was seen at 74.10 and 73.80 cents.
Floor dealers said estimated final volume reached 13,090 lots, from the previous day's count of 11,751 lots. Open interest in the cotton market gained 692 lots to 89,122 lots as of January 6.