US cotton futures settled the daily limit down on Monday, falling for the fourth time in the past five sessions, as uncertainty related to Japan's nuclear crisis triggered a commodity sell-off. The key May cotton contract on ICE Futures US lost 7 cents to finish at $1.9794 per lb, trading from $1.9794 to $2.0683. Last week, the market lost 3.7 percent, the first weekly loss for cotton futures in 9 weeks. The Reuters-Jefferies CRB commodity index fell 0.4 percent.
"Financial market uncertainty based on the disaster in Japan has funds shedding risk," said John Flanagan, president of broker Flanagan Trading Corp in North Carolina. Japan, the world's third largest economy, scrambled to avert a meltdown at a stricken nuclear plant on Monday after a hydrogen explosion at one reactor and exposure of fuel rods at another. Friday's massive earthquake and tsunami that killed at least 10,000 people. Pent-up selling also weighed down on the cotton market, which ended higher on Friday in light volume despite Japan's news.
"There is a belief that the planting intention number coming out at the end of month may be higher than expected, which partly explained why cotton fell," Keith Brown of Georgia-based Keith Brown and Co. The next bit of information which will provide direction for cotton futures would be the USDA's potential plantings data on March 31. That is the first government survey of likely plantings for major row crops like cotton, corn, soybeans and wheat in 2011. Despite the rally in cotton, the fiber has to compete for acreage against similarly high-priced grains this year.
Estimated volume traded Monday stood at about 16,000 lots, about 50 percent below the 30-day norm, Thomson Reuters preliminary data showed. Open interest in the market, an indicator of investment exposure in cotton, stood at 174,908 lots as of March 11, compared with 175,025 lots in the previous session, data from ICE Futures US showed.
Comments
Comments are closed for this article.