New York cotton futures tumble

10 Sep, 2008

Cotton futures finished softer on Tuesday on investment fund liquidation and tumbling commodity markets, with analysts saying the glum mood may lead to further losses this week. Key December cotton futures fell 1.32 cents to finish at 64.28 cents per lb. Based on the weekly second position daily charts, it was the lowest close for cotton since late in 2007.
The contract traded from 63.90 to 65.82 cents. Volume traded in the December contract stood at 15,563 lots at 2:38 pm (1838 GMT). Analysts said fibre contracts are moving mainly due to what happens in other markets and the gyrations of the US dollar. "Cotton is not trading cotton fundamentals.
Index funds are liquidating across the gamut" of the commodity sector," said Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia. There is also lingering unease about the bailout of mortgage giants Fannie Mae and Freddie Mac and what would the implication for cotton demand would be, Brown said.
Traders said the market will wait for the weekly export sales report due on Thursday and the monthly supply/demand report from the US Agriculture Department to provide direction for trading. Trade is also digesting news on how much damage was inflicted to cotton quality and yields by storms, which hit the US Gulf region.
Brokers Flanagan Trading Corp pegged support in the December contract at 63.75 and 62.90 cents, with resistance at 64.50 and 65.40 cents. Volume traded Monday was 16,661 lots - exchange data. Open interest in the cotton market dropped 3,080 lots to 221,412 contracts as of September 8 - the exchange said.

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