Cotton futures settled easier Wednesday on investor sales as the long-running economic crisis took its toll on fibre demand as cotton contracts lost almost 10 percent of its value in the month of November, analysts said. The key March cotton futures fell 1.84 cents or by almost 2 percent to finish at 90.91 cents per lb, trading from 90.70 to 93.67 cents.
On the month, the second position contract was down almost 10 percent. On Tuesday, March hit a session low of 88.50 cents in the lowest intra-day level for the second position contract since the start of September 2010, Thomson Reuters data showed. Total volume traded Wednesday was over 14,700 lots, nearly 40 percent below the 30-day norm, preliminary Thomson Reuters data showed.
"It's disappointment in the face of a lack of follow-through buying," independent analyst Mike Stevens said in describing the performance on Wednesday of the cotton market. The downturn in cotton took place despite a brisk cash cotton market, a weak dollar, which makes dollar-denominated commodities attractive for investors, and the joint action by central banks to shore up global economic activity.
The market is now looking toward Thursday's US Agriculture Department weekly export sales report to see if the strong buying of cotton by China will continue. In the last three weeks, the USDA's weekly export sales data said China has bought over 2.3 million running bales (RBs 500-lbs each) as it replenished state stocks which have been run down to keep domestic prices stable. Open interest, usually taken as an indicator of investor exposure, stood at 138,214 lots as of Tuesday, versus the prior session's tally of 136,573 lots, exchange data showed. Total volume traded Tuesday reached 19,103 lots from the previous tally of 12,078 lots, ICE futures US data said.
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