NEW YORK: Cotton fell more than 2 percent on Wednesday, its largest daily loss in two months, as news that top producers India and China will release cotton from government stocks spurred profit-taking.
The most-active May cotton contract on ICE Futures US declined 2.03 cents, or 2.2 percent, to settle at 89.10 cents per pound in the largest daily loss the spot contract has registered since late January.
The tumble derailed, at least temporarily, fiber's longest bull run in two years, which pushed prices to a one-year high of 93.93 cents a lb last week. Fiber has been the best-performing commodity so far this year after two years of double-digit percentage declines.
Investors rushed to sell positions after news that India plans to sell cotton from government stockpiles to local buyers, joining China in efforts to dampen the recent price surge.
Earlier on Wednesday, an international farm group official said China plans to sell 3 million tonnes of its state reserves.
Plans to offload some stock by the world's largest cotton producers and consumers may have spooked the market, said Nick Gentile, senior partner of commodity trading consultancy Atlantic Capital Advisors. The United States is the world's largest exporter of cotton.
Profit-taking took prices as low as 88.17 cents, where some buying returned after the market pierced fresh technical support at 89 cents a lb.
<Center><b><i>Copyright Reuters, 2013</b></i><br></center>
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