Cotton futures settled lower Thursday on investor sales as the inability of the market to build on the gains of the previous session prompted players to dump fibre contracts, analysts said. The key December cotton futures on ICE Futures US fell 4.00 cents or by 3.69 percent to finish at the session low of $1.0446 per lb, with the day's top trade at $1.087.
On Tuesday, the contract ended at $1.0439 to mark the lowest close for the second position cotton contract since early October 2010, Thomson Reuters data showed. Volume traded was over 12,100 lots at 2:47 pm EDT (1847 GMT), more than a third below the 30-day norm, Thomson Reuters preliminary data showed. Independent cotton analyst Mike Stevens in Louisiana said the market filled a gap left over from Tuesday in the December contract of $1.0888 to $1.0679 and this should have opened the door for a test of $1.11 to $1.13.
"When it had absolutely no follow through to the upside today, technical traders quickly took that as a sign there was obviously more to the downside despite the extremely oversold readings of virtually every technical indicator," he said. "It's a technical breakdown, a money flow." The market also came under pressure from the weekly export sales report of the US Agriculture Department which showed cancellations of 91,400 running bales (RBs, 500-lbs each).
Traders said the market is still monitoring conditions in Texas and the debate in the trade will now turn to how much of the US cotton crop would be harvested in the fall. Telvent DTN forecast Texas would remain dry through the weekend except for a few light showers. Open interest stood at 137,983 lots as of July 13, ICE Futures US data showed. Volume traded on Wednesday stood at 16,453 lots, it added.
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