* Funds bail before first notice day next week
* Weak grains complex weighs on cotton
NEW YORK, April 16 (Reuters) - Cotton futures closed Monday
near a month low on fund liquidation as investors scampered out
of the spot contract before it goes into delivery on first
notice day next week, traders said.
The benchmark May cotton contract on the ICE Futures
U.S. exchange fell the 4.00 cents daily limit to end at 88.08
cents per lb, with the session top at 92.13 cents.
It was the lowest settlement close for cotton since March
20, according to Thomson Reuters data.
The market has been moving in a wide band from 87 to 94
cents, basis the spot contract, since the start of March,
Thomson Reuters data showed.
Monday's estimated volume reached slightly over 45,500 lots,
almost double the 30-day norm, according to Thomson Reuters
data.
"The longs are being punished for overstaying their
welcome," said Sharon Johnson, senior cotton analyst at
commodities brokerage Penson Futures in Atlanta. "It's long
liquidation."
Open interest in the May contract stood at 25,336 lots as of
April 13 so the pressure to liquidate positions and not take
delivery has been ratcheted up, dealers said. There are five
sessions left before first notice day.
Another source of pressure may have come from the grains
complex, which also got hit by long liquidation, dealers said.
Open interest stood at 189,538 lots as of April 13, still
near the 193,427 lots on April 5, which was the largest number
of open cotton futures contracts since Feb. 15, 2011, ICE
Futures U.S. exchange data showed.