NEW YORK: ICE cotton eased on Friday, sliding to a 1.6-percent weekly loss amid heavy and volatile trade, as rising macroeconomic worries drove investors to the sidelines even as strong demand for U.S. cotton underpinned the market.
The benchmark March cotton contract on ICE Futures U.S. closed down 0.2 cent, or 0.2 percent, at 85.83 cents a lb.
Emerging markets stocks and currencies extended their slide after concerns about growth in China, the top consumer of many raw materials, and other emerging markets sparked a selloff late last week.
The worries sent cotton into a tailspin on Monday, but the front-month contract recovered most of the losses during a mid-week rally.
"An escalating emerging markets crisis introduced an additional uncertainty factor to an already complex cotton situation this week," Peter Egli, director of risk management for British merchant Plexus Cotton Ltd, said in a report.
Cotton traders have been caught between worry over ballooning global inventories amid a government stockpiling program in China and tightening supplies outside of the world's top textile market.
Beijing is set to overhaul the three-year stockpiling program in the 2014/15 crop year, compounding the uncertainty.
Total market open interest was 182,873 lots on Thursday, down by 5,765 lots from the previous Friday, the most recent ICE data showed.
Even with the week's loss, spot cotton prices ended January up 1.4 percent, climbing for a third straight month on signs of strong demand for U.S. cotton and escalating worry over tight supplies in the world's top exporter.
U.S. Agriculture Department (USDA) data on Thursday showed exporters saw a week of bumper sales even as prices touched near five-month highs.
Exchange stocks climbed to the most since early December.
They totaled 158,200 bales on Thursday, up from about 34,100 bales at the start of the month, according to ICE data compiled by Reuters.
The start to key index fund rolling contributed to the week's heavy volumes, as traders rolled their positions into the May contract.
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