Cotton dropped for a third straight session on Friday and posted its biggest weekly slide in nine months as speculative investors kept taking profits from a months-long rally that swept prices to one-year highs. Prices fell almost 6 percent on the week after Thomson Reuters reported that China and India, the world's No 2 producers, plan to sell some of their state stockpile to help deflate soaring domestic prices.
---- Prices still up 17pc year-to-date
---- Traders awaiting much-anticipated USDA planting survey
That news brought fibre's longest bull-run in two years to an abrupt end this week with investors fearing the release of material on the market will hurt demand for imported material. The United States is the world's biggest exporter. Prices remained up 17 percent since the start of the year. On Friday, the most-active May cotton contract on ICE Futures US settled at 87.29 cents per lb, dropping 0.91 cent or 1.03 percent. That is its lowest level since March 12.
Losses accelerated as funds liquidated some of their massive net long position and commercial players such as growers and merchants sold forward. Mills withdrew from buying once prices hit one-year highs of 93.93 cents a week ago, traders said. "Funds and specs ... were driving it up the whole way. Now, you need to see the industry paying up to these levels," said Christopher McGowan, a trader with Newedge in New York. With commercial hedgers and traders adding to their net short in the week, the market may be prone to short-covering rallies, traders said.
Looking ahead to next week, traders are braced for the US Department of Agriculture's much-anticipated planting survey due for release on March 28. The poll of US farmers will give investors and merchants their first glimpse of acreage dedicated to cotton when spring planting starts next month. Most market participants are expecting one of the smallest crops in decades as farmers gravitate to higher-priced grains. Trading will be shut on March 29 for the Easter holiday.