Cotton futures ended lower Wednesday on speculative sales as worries over the protracted eurozone debt crisis kept investors on the defensive, dealers said. The key December cotton contract on ICE Futures US dropped 1.20 cents or 1.2 percent to conclude at 98.34 cents per lb, moving from 98 cents to $1.007.
Total volume traded Tuesday hit over 20,000 lots, over one-third above the 30-day norm, preliminary Thomson Reuters data and ICE Futures US data showed. On Friday, the contract ended at $1.0437 in the highest settlement close for spot cotton in six weeks in initial euphoria that the European debt crisis has been resolved.
But Greece's decision to put the bailout package to a vote in a referendum deflated most financial markets due to worries over a global recession and cotton is seemingly no exception. "Cotton is going to share some of that pain," said Sharon Johnson, senior cotton analyst at commodities brokerage Penson Futures in Atlanta.
Independent analyst Mike Stevens said cotton was also seeing rolling of positions forward by index funds. Traders said there was also some liquidation of positions due to the failure of US brokerage MF Global. The market will be looking toward release of the weekly export sales report from the US Agriculture Department on Thursday to gauge the pace of US cotton export sales.
"I think some sales were done last week when the market went down to the 96 cents area and we expect the Chinese in there," a dealer said of the world's top consumer of cotton. Technically, dealers said the December contract may soon take aim at the recent low of 96 cents hit last week and possibly go toward 93 or even 90 cents further afield.
Open interest in cotton, usually taken as an indicator of investor exposure in cotton, stood at 164,904 lots as of November 1, its highest level since April 20, exchange data showed. Total volume traded Tuesday in the cotton market reached 37,442 lots, from the previous tally of 25,331 lots, ICE futures US data reported.
Comments
Comments are closed.