Cotton futures ended lower on Thursday due to investor sales sparked by global macroeconomic worries, but talk of crop problems in Pakistan and possibly top consumer China pared market losses, brokers said. Jitters over Europe's debt crisis and a raft of weak US economic data triggered a rout in global equities and spurred investors to the perceived safety of gold and US government bonds.
The key December cotton contract on ICE Futures US fell 0.87 cent to finish at $1.0695 per lb, moving from $1.0382 to $1.08. Trading volume totalled more than 14,000 lots, some 3.4 percent above the 30-day norm, Reuters data showed. "I think there are legitimate (fundamental) fears" in the cotton market, said senior cotton analyst Sharon Johnson of commodities brokerage Penson Futures in Atlanta, Georgia. "It is holding together very well."
Those factors include talk of losses of up to 400,000 480-lb bales of cotton from rains in Pakistan, a hot summer and limited irrigation in former Soviet countries such as Uzbekistan, and heavy rains in some cotton-producing areas of No 1 producer and consumer China.
Mill buying and speculative purchases stemmed intraday declines in cotton, while investor interest recovered modestly from recent lows. Open interest in cotton futures was at 144,650 lots as of August 17, more than 4,000 above the 140,442 lots on August 11, which was then the lowest level in over two weeks, ICE Futures US data showed. Total volume traded on Wednesday hit 19,198 lots, up from the Tuesday level of 7,113 lots, which was the lowest level of business since May 23, ICE Futures US data showed.
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