Cotton futures drifted lower on Thursday in light volume, as pressure from expectations of huge supplies outweighed physical demand. The most-active December cotton contract on ICE Futures US closed down 0.51 cent, or 0.8 percent, at 65.45 cents a lb. Output in key producers is expected to outpace demand again this year. Worries have been mounting over demand in top consumer China, where the government is scrapping a stockpiling program that has driven voracious demand for foreign fibre.
India's monsoon rains were active, boding well for the crop in the world's second-largest producer. The US Agriculture Department (USDA) said in a report that India's output is expected to be higher than previously forecast. Production in the United States, the world's top exporter, is forecast to hit a four-year high. "Traders report more scattered business as spinners continue hand-to-mouth in front of the Northern Hemisphere harvest," said INTL FCStone brokers in a daily market note.
Traders eyed a weekly US government export report due on Friday, which was delayed because of Monday's US Labour Day holiday. Even so, concerns over nearby supplies kept spot prices at a premium. The premium of the spot contract edged up to 0.25 cent a lb, up from 0.19 cent previously and a discount last week. Exchange inventories continued to slide to the lowest levels since January. They slipped to 66,982 bales on Wednesday from 67,517 bales previously, the most recent ICE data showed.
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