Cotton futures fell on Friday, registering the biggest loss in nearly a month as index buying waned after sharp gains in recent days even as traders took stock of China's plans to auction its massive reserves of the natural fibre. "Thursday's poor export sales data, combined with the overbought condition of the market and the (mostly) culmination of index purchases in July are the likely culprits," said Louis Rose, independent cotton trader and consultant with Risk Analytics in Memphis, Tennessee.
China will start annual cotton sales, set to occur from May to August, in order to reduce its massive state reserves down to a "reasonable level," the country's state planner said on Friday. However, the market has not taken China's statements to be bearish, said Rose, adding that the potential purchase of high-quality stocks later seems supportive at current levels.
The July cotton contract on ICE Futures US settled down 0.83 cent, or 1.36 percent, the biggest loss in nearly a month, at 60.02 cents per lb, after hitting as low as 59.12. However, the contract ended up 0.77 percent this week. Total futures market volume fell by 1,326 to 53,511 lots. Data showed total open interest fell 2,725 to 206,021 contracts in the previous session. The dollar index was down 0.19 percent. The Thomson Reuters CoreCommodity CRB Index, which tracks 19 commodities, was down 0.65 percent.
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