Cotton futures ended lower on Thursday on investor sales as the prospect of a debt deal in the EU and the US failed to fire up market participants who feel the deals would just postpone solving urgent budget problems in both regions for another day, analysts said.
Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia, said news on the deal in the EU and in the US looks like a "kick the can down the road" agreement which does not really solve the macro issues for both areas.
The key December cotton futures on ICE Futures US dropped 2.12 cents to finish at 98.63 cents per lb, trading from 96.75 cents to $1.015. On Monday, the contract finished at 96.46 cents in the lowest close for the second-position contract since early October 2010, Thomson Reuters data showed.
Business was light. Total market volume hit around 10,800 lots at 2:51 pm EDT (1851 GMT), over 40 percent below the 30-day norm, Thomson Reuters preliminary data showed.
Cotton was also pressured by the weekly export sales report from the US Agriculture Department. USDA said only a mere 31,200 running bales (RBs, 500-lbs each) of upland cotton were sold by US exporters, which traders said in an indication of how weak fibre demand has been for several weeks.
"We're trying to limp along here and finish out the month (of July)," said Brown, adding many players are looking toward the USDA's August supply/demand report to provide market direction.
The August USDA report is the first for the 2011/12 marketing year (2011/12) and is also the first in the season to be based on detailed government surveys since the July supply data is based on estimates by USDA analysts. Volume traded on Wednesday stood at 16,319 lots, slightly over 10 percent behind the 30-day average, ICE Futures US and Thomson Reuters data showed.
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