Cotton futures slipped on Friday in rangebound trade on light volume as fears about greater supply from India, the world's No 2 producer, and tepid US job data offset shrinking exchange stocks. News that India has eased restrictions on exports knocked prices lower. Heavy rains bolstered farmers' crop expectations. The strong potential for a much larger record crop will keep a lid on prices, said Sharon Johnson, cotton specialist with KCG Futures in Atlanta.
The benchmark December cotton contract on ICE Futures US closed down 0.45 cent, or 0.5 percent, to settle at 84.98 cents per lb. Just 7,300 lots of December contract traded on the day. Prices ended the week down slightly. Certified exchange stocks fell again fuelling some traders' concerns about lower domestic supplies even as the new 2013/14 season started on August with a carryover of over 3 million bales, the highest in years.
Total ICE stocks dropped to 70,644 bales from around 71,848, their lowest since late last year, according to ICE data. "Bulls have been touting the drop in certified stocks this week as a win in their column. However, the decrease is not unexpected and a year ago, stocks level were even lower," said Johnson.
The broader commodity market came under pressure even as the US dollar slipped against a basket of currencies after a tepid US jobs report, making dollar-denominated raw materials cheaper to holders of other currencies. Data showed the US jobless rate fell in July but hiring slowed. After a string of better-than-expected data this past week that buoyed optimism about economic growth in the second half of the year, the tepid jobs data served as a reminder that the recovery faces headwinds.