ICE cotton futures fell for a 10th straight session to the lowest level since early September on Thursday as investors continued to liquidate positions on bearish technicals amid expectations of rising new crop production. The December cotton contract on ICE Futures settled down 1.43 cents, or 2.10 percent, at 66.74 cents per lb. Prices plunged to their worst level since September 1, at 66.72 cents per lb.
"After the market traded through the 200-day moving average (last week), a closely watched indicator by big speculators and hedge funds, they began the liquidation process," said Keith Brown, principal at cotton broker Keith Brown and Co in Moultrie, Georgia. The contract remained in oversold territory with a relative strength index (RSI) of about 17, well below the oversold level of 30. "The market is not going up any higher, so they are abandoning the ship," Brown said. The December contract fell amid concerns of a robust production from the top-growing regions due to favorable weather conditions.
"In India and Pakistan, production is set to increase by around 1.5 million bales year-on-year in both countries due to heavy rainfall and a larger acreage," Commerzbank said in a note. "However, it is the US that is set to account for the highest proportion of the global production increase in the 2017/18 season, with growth of 2 million bales (up 12 percent)."
Sales of upland cotton for the 2016/2017 crop year totaled 167,500 running bales of cotton in the week ended June 15, up noticeably from the previous week, the weekly export sales data from the US Department of Agriculture showed. "Cotton prices are still providing an attractive hedging opportunity to farmers as we see upside risks to USDA estimates for global cotton production given an extremely good crop rating in the US, a strong start to Indian cotton planting and the slowing pace of US cotton exports," Societe Generale said in a note. "Weather remains a key for cotton bears as favorable weather across the world can push prices to 60 cents per lb."
Total futures market volume rose by 12,384 to 38,768 lots. Data showed total open interest fell 1,808 to 204,966 contracts in the previous session. The dollar index was up 0.02 percent. The Thomson Reuters CoreCommodity CRB Index, which tracks 19 commodities, was down 0.55 percent.
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