NYBOT cotton prices fell 5.5 percent on Friday as traders took profit before a long weekend, relieved that Hurricane Frances was downgraded a notch, before reaching Florida and possibly cotton growing areas northward.
Futures still closed up more than 3 cents for the week, and a course change on Friday could have put Frances even more on track to drench the important cotton farms in Georgia and Alabama, even as its intensity lessened.
Key December cotton fell 3 cents, settling at 51.58 cents a lb. It traded from 53.70 to 51.58 cents. March went down 2.98 cents to 52.78 cents.
"You didn't have good quality buying today and we scared out some of the weaker longs," said Sharon Johnson at Frank Schneider and Co in Atlanta.
"Frances slowed down and also lost some of her wind speed and once we became more comfortable with her path, we suddenly realised we'd pumped an awful lot of air into the market," she said.
Though downgraded to a category 3, with 115 mile-per-hour winds, from category 4, Frances is still dangerous. It has slowed, meaning that parts of Florida could be exposed to a prolonged battering.
In fact, twenty inches of rain is expected to fall on some parts of the state.
"That may intensify the amount of rain cotton areas receive," wrote Flanagan Trading Corp in its morning note. "Professional traders usually sell into rising prices ahead of hurricanes on ideas that damages are usually far less than feared."
In Georgia, the bolls on the cotton plants have opened, exposing the fibres directly. This poses a significant risk to yields and quality.
On the downside, the next big price levels on the charts were 50.50 and 47.80, the lows from August 23 and August 27.
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