US cotton futures fell their 6-cent daily limit on Tuesday for a third straight session, falling along with other commodities on worries about Korean violence while eurozone concerns pushed the US dollar higher, dealers said. The spot December contract, which traded in thin dealings, dropped nearly 9 cents as it was no longer subjected to price limit restrictions after entering its notice period on Tuesday.
-- Cotton falls by 6-cent limit for 3rd straight session
"The market was overdone. The financial situation and just more liquidation," were weighing on prices, said Bill Raffety, senior analyst for futures brokerage Penson. The benchmark March cotton contract on ICE Futures US were down the 6-cent limit, or 5.1 percent, at $1.1179 per lb by 10:42 am EST (1542 GMT). The March contract has fallen 26 percent from the November 10 record of $1.5195 per lb.
Total volume sat at 14,437 lots by 10:43 am, compared with the 30-day average for the final count at 37,165 lots, Thomson Reuters preliminary data showed. World stocks fell across the board while the dollar rose after tensions in the Korean peninsula prompted investors to trim risky assets, and the euro stayed under pressure as Ireland's debt crisis raged on.
"Fundamentally, I don't think things have changed. I think the market just got away from itself. There's a lot of profit taking coming in," Raffety said, referring to cotton futures. Cotton has been hit hard in recent days by mounting fears that China may take aggressive action to curb inflation running at a 25-month high, raising interest rates or capping domestic prices with measures that could crimp commodity demand or drain liquidity from bubbling domestic markets.
"(Funds) are definitely paring back their positions. Part of it is due to the steps they're taking in China," Raffety said. In China, the Zhengzhou Commodity Exchange's key May cotton contract was down 1,225 yuan at 25,225 yuan per tonne by 10:44 am.
Comments
Comments are closed.