Benchmark cotton futures were down on Thursday after lacklustre sales for the 2014/15 crop year offset robust sales for the current crop and as liquidation from the July contract dragged. The most-active December cotton contract on ICE Futures US edged down 0.06 cent, or 0.08 percent, to settle at 77.13 cents a lb.
-- July contract drags on benchmark
-- ICE stocks hit 427,727 bales
The front-month July contract, which enters delivery notice period next week and expires on July 9, also weighed on the benchmark contract. The contract tumbled over 3 cents before closing down 2.79 cents, or 3.1 percent, at 88.36 cents a lb as traders raced to close positions ahead of the expiry. A weekly export sales report from the US Agriculture Department (USDA) showed sales booked for the crop year set to begin disappointed, even as robust sales against the current 2013/14 marketing year beat expectations.
"I thought we'd see better sales for the new crop. The standout was the 2013/14 sales," said Sharon Johnson, a cotton specialist with KCG Futures in Atlanta. The benchmark December contract hit a session low immediately after the report's release showed 103,300 running bales of net upland cotton were sold in the week ended June 12 before paring losses.
Spread-related trade dominated the day's action as the July contract swung in a wide 3.43-cent range as the contract saw its first decline in six sessions. "Traders are getting out ahead of the delivery," said Louis Rose, an independent cotton trader and consultant at Risk Analytics in Tennessee. The spread-related gyrations pressured the front-month July contract's premium over December to 11.23 cents a lb from 13.96 cents a lb previously. Exchange inventories rose to 427,727 bales on Wednesday from 420,728 bales on Tuesday, climbing toward May's 10-month highs, ICE data compiled by Reuters showed.
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