US cotton futures trading on ICE Futures extended the previous session's losses and closed lower on Wednesday, as rising certified stocks provided pressure. The most-actively traded December cotton contract on ICE Futures US settled down 0.85 cent, or 1.2 percent, at 70.07 cents per lb.
The market moved lower as ICE certified cotton stocks rose. Earlier this month, some had worried about a possible supply squeeze, and the market jumped to 80 cents a lb, its loftiest level since mid-June. "We're starting to see a build up again on the certified stocks," said Chris McGowan, trader with Newedge USA in New York.
Stocks rose by a slight 16 percent since mid-October, then jumped by 20 percent within two days, reaching 10,641 bales by October 31, exchange data shows. Though this remains only about a third of the certified stock of a year ago, the sudden rise weighed on futures.
McGowan said that not only are certified stocks rising but he's hearing that more of the cotton that's being sent for grading, is passing. This is in stark comparison to earlier in the month when there were near-term concerns that the cotton coming in was of a poor quality. "There's a huge amount of oversupply in the world," McGowan said. "We're now getting back to the long-term picture, the bearish sentiment is back in place."