US cotton futures ended lower on Friday, posting their fourth consecutive weekly loss, as fibre values continued to reel from demand destruction above the $2 per lb level. The market will be shut for the US Independence Day holiday on Monday and reopen on Tuesday.
Benchmark December cotton futures on ICE Futures US dropped 0.78 cent, or 0.7 percent, to finish at $1.1781 per lb, after moving from $1.1651 and $1.1989. On a weekly basis, the contract dropped 3.4 percent, its fourth straight week of losses. Cotton prices rallied to a peak of $2.27 per lb in the first quarter of the year, as tight supplies and robust demand, especially from top consumer China, fuelled the charge.
But after such a fast and furious charge to price levels unseen since the US Civil War, consumer demand began to wane and prices responded, losing more than 40 percent in the second quarter alone. Data this week reflected that demand destruction, market participants said. "The data with the loudest voice was not the supply/demand numbers as much as it was the exports, with that huge cancellation by China," said Keith Brown of Keith Brown and Co in Moultrie, Georgia.
The US Department of Agriculture (USDA) reported on Thursday a hefty sales decline of 136,900 running bales (RBs, 500 lbs each) to China. "We've got export hangover," Brown said. The market was also hit by follow-through losses from an annual planted acreage report by the USDA on Thursday, that pegged US 2011 cotton sowings at 13.725 million acres, the highest since 2006 when 15.274 million acres were sown.
The USDA plantings number came in at the higher end of a Reuters poll, with the average analyst estimate at 13.26 million acres. In India, a monsoon over the country's southern Andhra Pradesh state slowed the cultivation of cotton to 476,200 hectares as on June 29, against 605,000 hectares a year ago.
Market volumes picked up a bit from the sluggish pace at the beginning of the week, but remained on the low side. Only 7,526 lots traded late in New York, down 67 percent from the 30-day norm, Thomson Reuters preliminary data showed. On the weather front, more extreme heat is in store for the US Southwest and Texas through Tuesday, forecaster Telvent DTN said in a daily comment. Open interest in the ICE Futures cotton market stood at 139,460 lots as of June 30, the highest since June 20 and up 2,199 lots from the previous session, ICE Futures US data showed.