NEW YORK: US cotton futures fell to six-week lows to hit a key technical support on Wednesday as mill buying evaporated and investors worried that possible involvement of western countries in the Syrian conflict could hurt the global economy.
Cotton is very sensitive to world economic health as it is tied to retail demand for clothes and fabrics.
Benchmark December cotton contracts on ICE Futures US settled at 83.75 cents a lb, down 0.4 cent or about 0.5 percent.
Prices ended the day just above its 100-day moving average at 83.55 cents per lb and just over 2 cents away from its 200-day moving average, its next area of support.
"The market depends on weather at the moment. It should be beneficial to production and that has constrained prices," said Sterling Smith, futures specialist for Citigroup.
The return of dry weather across cotton-growing states Alabama and Georgia will help US crops, analysts said.
While the United States is expected to produce its smallest crop in years in 2013/14, the market is also pressured by a big carryover from last season, which ended on July 31.
Technically, the market remained close to oversold with a 38 reading on a Relative Strength Index and Wednesday's drop may trigger more mill buying, dealers said.
The drop was in contrast to gains across commodity markets, led by oil and gold, which were bolstered by concerns about rising tensions in the Middle East.
Wednesday's fall took cotton's price drop since Aug. 16 to 11 percent, wiping out the gains earlier in the month.
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