Cotton futures finished Thursday at nearly four-year lows on fund sales as poor fibre demand and the spectre of a global recession raised the prospect of further losses in the market, brokers said.
The key December cotton contract fell 1.79 cents, or by nearly 4.0 percent, to close at 45.09 cents per lb, dealing from 47.62 to a lifetime low of 45.03 cents. On the spot weekly charts, it was the lowest finish for cotton since trading around 43 cents in February 2005. March dropped 1.70 cents to 49.18 cents.
Volume traded in the December contract stood at 12,979 lots at 2:47 pm (1843 GMT). "The path of least resistance is now down," said Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia. He said a government report showcased the weak demand for cotton, referring to the weekly export sales report of the US Agriculture Department.
USDA said total US cotton sales stood at a measly 58,500 running bales (RBs, 500-lbs each) from 313,700 RBs in last week's report and trade belief it would range from 250,000 to 350,000 RBs. Brown said a decrease in sales to top cotton consumer China was particularly damaging to market sentiment.
"(We) don't have any demand to drive it (cotton futures)," he said, adding the market may now have "open running room" to probe as low as 42 cents, basis the spot month. Analysts also took note of the steady pace in the USDA report of US cotton export shipments.
USDA said US cotton export shipments stood at 250,100 RBs, against 229,000 RBs in last week's report and trade belief it would range from 200,000 to 250,000 RBs. Brokers Flanagan Trading Corp sees support in the December contract at 44.30 and 43.45 cents, with resistance at 45.35 and 46.65 cents. Volume traded in the cotton market Wednesday was at 18,569 lots, exchange data showed. Open interest in the cotton market rose 3,553 lots to 175,516 contracts as of October 29, the data showed.