Cotton futures were little changed on Monday in subdued trading above recent two-year lows, still under pressure from speculator selling on expectations of ballooning inventories in the new crop year. The benchmark December cotton contract on ICE Futures US closed down 0.05 cent, or 0.07 percent, at 67.69 cents a lb after trading in a tight range of less than 1-cent throughout the day.
Speculators have been building a bearish position in cotton, hiking it to the highest in eight months during the most recent reporting week, according to US government data released on Friday after the market closed. The droves of selling amid increasingly bearish expectations for a bumper 2014-15 crop in the United States, the world's top exporter, pressured prices to a two-year low of 67.10 cents a lb earlier this month.
Exchange inventories dropped to 290,975 bales on Friday from 307,727 previously and falling further from July's one-year peak above 462,000 bales. The second-month sunk even further into technically oversold territory, as its 14-day relative strength index dipped to 19.19 from 19.29 previously. "The trend of the market is down. Nobody wants to be a hero and try to pick a bottom down here," said Keith Brown, principal at cotton brokers Keith Brown and Co in Moultrie, Georgia. Even so, he said the selling spree may be "exhausted." A weekly US government report released after the market close showed the majority of the crop was in good or excellent condition, a jump from the previous year.
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