NY cotton settles lower as USDA report weighs

Friday, 10 February 2012 02:59

NEW YORK: Cotton futures finished lower on Thursday on investor sales as a large increase in world cotton ending stocks in a government crop report weighed on fiber contracts, analysts said.

Benchmark March cotton on ICE Futures US declined 3.24 cents, or almost 3.5 percent, to finish at 90.38 cents per lb, dealing from 90.23 to 94.44 cents.

The US Agriculture Department's monthly supply/demand report showed that world 2011/12 cotton stocks were forecast at 60.77 million (480-lb) bales, from 58.35 million bales in last month's report.

Sharon Johnson, senior cotton analyst at commodities brokerage Penson Futures in Atlanta, said cotton declined "in large part because of the USDA report."

"You can't get around that (world stocks number) being bearish," she said.

The USDA also increased its estimate for world 2011/12 cotton production to 123.34 million bales, from 122.84 million, and reduced world 2011/12 cotton consumption to 109.71 million bales, from 109.99 million bales.

Traders said US cotton production estimates were largely unchanged and did not have an impact on the market.

On Friday, the trade is looking toward release of an annual survey by the National Cotton Council on potential US cotton plantings this year, which is due out on Friday after the market closes at 2000 GMT.

A Thomson Reuters survey in January showed American farmers are expected to cut 2012 cotton plantings by some 10 to nearly 12 percent to around 13.002-13.242 million hectares.

Open interest in cotton , an indicator of investor exposure in the market, rose to 191,651 lots as of Feb. 8, the highest since the middle of April last year, ICE Futures US data showed.

Volume traded on Thursday was more than 56,200 lots, which would be the highest since mid-February 2011, Thomson Reuters data showed.

On Wednesday, volume hit 34,880 lots, exchange data showed.