US cotton closed down on Thursday as investors took profits from a market that has been more resilient than many commodities this week amid bearish economic sentiment. Cotton futures in New York snapped two days of gains, marking their first big slide since the deep rout in commodities on Monday on global growth worries.
That drop followed the previous week's euphoria from the US Federal Reserve's latest stimulus. "There was a little more selling than buying today in cotton, which can certainly account for profit-taking, as this market has followed the stock market more than other commodities of late," said Sharon Johnson, cotton specialist at Knight Futures in Atlanta, Georgia.
New York-traded cotton for December delivery settled down 1.19 cents, or 1.6 percent, at 75.22 cents per lb on ICE Futures US, after moving between 76.40 and 75.05 cents. It was the sharpest fall for the contract since September 12. Trading was, however, lighter than usual, with Thomson Reuters data showing volume in ICE cotton at 23 percent below the 30-day norm.
Commodities were largely hit by bearish sentiment this week, after rising to multi-month highs last Friday on the Fed's pledge to buy an additional $40 billion of bonds a month to support recovery in US jobs and the economy. Cotton was an exception, tracking the mild drop on US stocks more than the slump on the 19-commodity Thomson Reuters-Jefferies CRB index.
December cotton fell less than 1 percent on Monday when crude oil, another major industrial commodity, lost about 3 percent. On Tuesday through Wednesday, cotton posted gains of nearly 1.5 percent in total while the CRB fell 2 percent. Week to date, December cotton is down just 1 percent, compared to the slump of more than 4 percent on the CRB.
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