ICE cotton fell in choppy trade on Wednesday, under pressure from the rolling of closely watched index funds and expectations that the US government will increase its projections for excess global inventories in a monthly forecast next week. The most-active December cotton contract on ICE Futures US sank to a two-week low of 62.02 a lb before sharply paring losses to end down 0.09 cent, or 0.1 percent, at 62.71 cents a lb. Volumes were above average as traders rolled forward long positions from the spot December contract, which is due to expire in about a month.
The US government is widely expected to boost its outlook for global inventories by the end of July 2015 due to higher output forecasts for India and the United States, two of the world's three largest producers. The US Department of Agriculture (USDA) in October projected world stocks will hit a record of 107.1 million 480-lb bales by end-July after farmers in key growing regions increased acres this year.
"USDA will probably up the world (stocks) a little bit due to a larger crop in India (and) the US may be up about 50,000 bales," said Keith Brown, a principal at cotton brokers Keith Brown and Co in Moultrie, Georgia. Meanwhile, demand worries have mounted. Prices hit five-year lows below 61 cents a lb in September due to expectations that Beijing will sharply curb its import quota in 2015 in a bid to push the country's mills toward domestic supplies.
US imports of apparel made primarily of synthetic fibres have surpassed cotton for the first time in decades in the first nine months of the year, the most recent US government data show. Even as cotton prices have sunk some 30 percent year-to-date, polyester prices have also tumbled, dashing hopes that this year's price rout will stir demand for cotton.
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