US cotton futures crumbled in the face of investor liquidation to finish Thursday at a four-month low as the sell-off in the commodities sector weighed on fibre contracts. Although analysts said the sell-off seemed to be abating [MKTS/GLOB] cotton futures still skidded to its lowest level since the middle of January. The key July cotton contract on ICE Futures US dropped the 6-cent daily limit to close at $1.443 per lb, with the session top at $1.5512.
The new-crop December cotton futures lost 6.00 cents as well to finish at $1.1919 per lb. Volume traded stood around 10,600 lots, over 50 percent below the 30-day norm, Thomson Reuters preliminary data showed. "The macroeconomic meltdown ripples through everything and you just get out of the way," said Mike Stevens, an independent cotton analyst in Mandeville, Louisiana. For the second week in a row, the commodity sector was hit by a steep two-day sell-off which seemed to strike in both weeks on Wednesday and Thursday.
Stevens said there might be a recovery on Friday if the pattern from last week is duplicated this week. But the downturn has nothing to do with cotton market fundamentals and there was little reaction to the weekly export sales report from the US Agriculture Department.
USDA said total US cotton sales for 2011/12 reached 76,000 running bales (RBs, 500-lbs each), from 74,600 RBs in last week's data. US cotton exports reached 356,000 RBs, from 432,700 RBs in last week's USDA data. The level of investor interest in the cotton market appears to be gradually recovering. Open interest in the cotton market rose to 150,125 lots as of May 11, from the prior rally of 150,102 lots, data from the ICE Futures US showed. Open interest stood at 147,578 lots on May 6, which is the lowest level since October 2009, ICE Futures US said. Volume came to 19,584 lots as of May 11, versus the previous tally of 19,551 lots, exchange data reported.
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