NEW YORK: Cotton futures settled at a 140-month low Thursday on investor liquidation as nagging worries about the euro zone debt crisis and weak fiber demand pushed the market below a key support level, analysts said.
The December cotton contract on ICE Futures US dropped 2.86 cents or by almost 3 percent to end at 96.86 cents per lb, trading from 96.78 cents to $1.0004. It was the first time in almost 4 weeks that the market broke a trading band that had confined December in a range from 98 cents to $1.04.
It is the lowest settlement for the spot cotton contract since September 2010, according to Thomson Reuters data.
Total volume traded Thursday hit over 19,600 lots, more than 40 percent above the 30-day norm, preliminary Thomson Reuters data showed.
"The market has dropped off precipitously. I think the European thing has a role in it," said Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia.
World stocks and the euro fell on fresh doubts that the keenly awaited EU summit this weekend will result in a comprehensive plan to rein in the euro zone debt crisis.
Traders said cotton futures have found it difficult to sustain its advance beyond the $1.04 mark because the debt crisis could further damage cotton demand if there is another recession.
Brown said the cotton market is also being weighed "by (US cotton) harvest pressure...and no demand."
Open interest in cotton, usually taken as an indicator of investor exposure in cotton, stood at 152,825 lots as of Oct 19, from 151,550 lots on Oct 18, the exchange said.
Total volume traded Wednesday in the cotton market reached 15,343 lots, against the prior tally of 19,992 lots, ICE futures US data showed.
Comments
Comments are closed for this article.