ICE cotton futures tumbled on Friday, skidding to the biggest weekly loss in seven months as rains showered Texas, the top US producing state, and eased worries over upcoming supplies in the world's top exporter. The most-active July cotton contract on ICE Futures US plunged to a three-month low of 85.26 cents before closing down 1.47 cent, or 1.7 percent, at 86.31 cents a lb.
-- Fibre plunges to three-month low
-- Speculators slash bullish cotton bet
-- Spot contract sinks to technically oversold territory
The day's sharp loss shot cotton near oversold territory, with a 14-day relative strength index of 30.1. Prices ended the week down almost 4 percent in a three-week rout under pressure from easing worries over US supplies as exchange inventories climb and crop progress gathered pace.
Rains in Texas have stoked selling this week, easing concerns over the state's multi-year drought that has crushed crops and raising production prospects in the 2014/15 crop year that begins August 1. "This rain event couldn't be timelier ... instead of scores of abandoned acres, we may actually see some green fields around Lubbock in a month from now," Peter Egli, director of risk management for British merchant Plexus Cotton Ltd, said in a report.
Speculators slashed a net long in ICE cotton contracts in the week ended May 20, cutting their bullish bet for a straight week, weekly US government data showed. Exchange inventories rose again to 431,200 bales on Thursday, up from 429,100 bales previously, the most recent ICE data showed. That was the highest in ten months.
The front-month contract is poised for its first monthly loss in seven months, as prices have fallen slumped under pressure from expectations of rising inventories and waning demand in 2014/15. Prices hit over two-year highs around 97 cents a lb in mid-March on worries over tight nearby supplies. US stocks are poised to rise from three-year lows and demand in top consumer expected to drop sharply as Beijing abandons the stockpiling program it launched in 2011 that has driven voracious import demand.
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