Cotton futures finished on Tuesday at a two-week low on investor sales as players looked toward the release of a government crop report due out Wednesday, brokers said. There was no reaction to the plan announced by Brazil to hit 100 US goods with duties next month because of a dispute with Washington over US cotton subsidies because the amount of cotton traded between the two nations is small at best, analysts said.

The benchmark May cotton contract retreated 1.71 cents or by 2.08 percent to close at 80.33 cents per lb, dealing from 79.81 to 82.04 cents. It was the lowest close for cotton in two weeks, according to Thomson Reuters Data. Last week, the contract hit a session top of 84.60 cents, the highest intra-session level since mid-March 2008, according to Thomson Reuters data. Volume traded in the May contract was at 9,103 lots at 2:54 pm EST (1954 GMT).

"I think we're pricing in some disappointment in the report," said Sharon Johnson, cotton expert for First Capitol Group in Atlanta, Georgia. She said the US Agriculture Department's monthly supply/demand report may fulfil expectations by some in the trade of cutting China's cotton production estimate. Some in the trade are looking for a reduction of as much as 3.0 million (480-lb) bales from China's estimated output of 32 million bales.

Traders said the market was also weakened by the strength of the dollar and the belief that the rally to 84.60 cents last week was a bit overdone. Analysts said that once the market is done with the supply report, attention will shift to the USDA's annual potential plantings data being released at the end of the month.

Brokers Flanagan Trading Corp sees resistance in the May cotton at 81.40 and 82.65 cents, with support pegged at 79.50 cents. Volume traded Monday in the cotton market was at 10,510 lots, from the previous 10,451 lots, according to data from ICE Futures US. Open interest in the cotton market stood at 184,635 lots as of March 8, versus the prior count of 185,569 lots, the exchange said.
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