US cotton futures closed down for a fourth straight day on Friday, extending a pullback from the $2/lb level as sentiment soured in response to another bearish outlook from Goldman Sachs. The key May cotton contract on ICE Futures US shed 0.52 cent to finish at $1.9552 per lb, near the bottom end of its $1.9425 to $1.9801 range.
Second-position July closed down 0.60 cent at $1.7740 per lb, while new crop December dropped 3.27 cents at $1.2918. Trading volume totalled 15,742 lots, more than 40 percent below the 30-day norm, Thomson Reuters preliminary data showed. "A general weakness in the grain markets and Goldman looking to exit the front end of the market is creating a bit of stagnation," said Sterling Smith, an analyst for Country Hedging Inc in St Paul, Minnesota. Goldman on Friday recommended investors go underweight commodities over a three- to six-month horizon.
The bank did, however, maintain an overweight recommendation for commodities over a 12-month horizon as fundamentals are expected to tighten over the next year. South Asia is likely to receive normal monsoon rains in 2011, a gathering of global weather forecasters said on Friday, good news for countries such as India whose massive demand for farm goods impacts international markets.
India is the world's second-biggest cotton producer. Concerns remained, however, about more cotton coming into the market from major Southern Hemisphere growers such as Australia, Brazil and Argentina. Australia could harvest another bumper cotton crop next year, possibly matching this year's estimated harvest of a record 4 million bales, an industry official said on Thursday, noting that growing conditions remained ideal. Open interest in the cotton market stood at 194,708 lots as of April 14, down from a previous 197,502 lots, data from ICE Futures US showed.