Cotton drops to over 6-1/2-year lows on chart signals, China worries

Cotton futures fell for a fourth straight session on Monday to the lowest since June 2009, as worries over demand in the world's top consumer China sparked selling early in the session and stop-loss orders exaggerated the day's declines. "Fundamentals are heavy enough that key technical support was taken out and sell stops were activated," said Michael McDougall, director of commodities for Societe Generale in New York.
China said on Monday it expects to lay off 1.8 million workers in the coal and steel industries, or about 15 percent of the workforce, triggering fresh fears over the economic strength of the top consumer. The May contract on ICE Futures US settled down 1.03 cent, or 1.79 percent, at 56.5 cents per lb, breaching a key technical support level of 57 cents. It traded within a range of 54.53, a contract low and the lowest since June 30, 2009, and 57.62 cents a lb. Certificated cotton stocks deliverable as of Friday totalled 68,318 480-lb bales, up from 66,104 in the previous session. The dollar index was up 0.07 percent. The Thomson Reuters CoreCommodity CRB Index, which tracks 19 commodities, was up 1.05 percent.