Cotton futures finished Monday at a 16-month low on follow-through investor sales as recession fears from the eurozone debt crisis and a bearish crop report kept the market on the defensive, analysts said. Key March cotton futures slid 3.27 cents or 3.6 percent to close at 87.16 cents per lb, after dealing between 87.06 to 90.84 cents.
It was the lowest settlement for cotton's spot contract since late August 2010, which was when the market began a historic rally that lifted it to record levels above $2 a lb earlier in the year. Volume traded Monday stood at around 16,800 lots, around a quarter under the 30-day average, Thomson Reuters data showed.
"It's follow-through selling from the weak close on Friday," said Mike Stevens, an independent cotton analyst in Mandeville, Louisiana. "Cotton doesn't have a chance," he said, adding fibre contracts are "very sensitive" to a recession that could decimate cotton demand. Global stocks and the euro slid on Monday as investors soured on a EU plan to enhance fiscal discipline in the bloc and quell a 2-year-old debt crisis. The bearish impact of the government's crop report also underscored the already bearish tone of the Agriculture Department's monthly supply/demand report. USDA forecast world 2011/12 cotton consumption at 111.34 million (480-lb) bales, from 114.27 million bales last month, and kept world 2011/12 production at 123.42 million bales.
Open interest in the cotton market, usually taken as an indicator of investor exposure in the market, stood at 141,311 lots on Friday, exchange data showed. Volume traded Friday slowed to 12,058 lots from the prior day's 7,682 lots, ICE Futures US data reported.
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