Cotton futures fell for a third straight session on Tuesday, under pressure from long liquidation following last week's bearish US government supply-demand outlook. The most-active July cotton contract on ICE Futures US edged down 0.37 cent, or 0.4 percent, to settle at 90.93 cents a lb.
The contract hovered throughout the day just above Monday's low of 90.50 cents, the weakest level for the July contract in one month, as mills spied the prices dips as opportunities to set prices on previously booked bales. Prices have been under pressure since the US Agriculture Department on Friday offered a bearish revision for its 2013/14 supply-demand outlook. The agency raised its stocks forecasts for both the United States and the world by the end-July end of the crop year.
"The specs are jumping ship here," said Sharon Johnson, a cotton specialist with KCG Futures in Georgia. Total open interest was 191,103 lots on Monday, down 3,455 lots from the previous session, ICE data showed on Tuesday. The sharp reduction in interest alongside falling prices was seen as evidence of speculator selling. The front-month was under pressure after it closed below the 50-day moving average of 91.77 cents a lb on Monday and continued to trade below it throughout Tuesday's session.
Further adding weight, exchange inventories have been climbing. They hit nearly 389,900 bales on Monday, the most recent ICE data showed on Tuesday. That was the most since July, exchange data compiled by Reuters showed. Plantings progress in the United States, the world's top exporter, picked up in the most recent reporting week, but was still below the prior five-year average, US government data showed on Monday after the close.
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