Cotton futures closed on Tuesday at a new nine-month low for a second day running due to investor sales, and weak demand coupled with jitters over the eurozone crisis could hit values further, brokers said. The key December futures on ICE Futures US fell 4.49 cents, or 4.12 percent, to end at $1.0439 per lb, dealing from $1.0388 to $1.0679.
It was the lowest close for the second-position contract since early October 2010, Thomson Reuters data showed. The market last traded below the psychological $1 mark also in October 2010, Thomson Reuters data showed.
Volume traded was almost 21,500 lots at 2:49 pm EDT (1849 GMT), nearly 10 percent above the 30-day norm, Thomson Reuters preliminary data showed. "Cotton's a pretty sick puppy. We have falling prices because of falling global consumption," said Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia. The softening demand was underscored by a monthly supply report from the US Agriculture Department, which reduced its forecast for world cotton consumption in the 2011/12 marketing year (August/July) to 123.16 million 480-lb bales, from last month's 123.77 million bales.
World 2011/12 cotton ending stocks were seen rising to 51 million bales from 48.25 million, and total Chinese consumption in 2011/12 was cut to 46.5 million bales from 47.5 million.
Brown said the market may need to plumb lower, adding that "we've got to have a huge break in cotton (prices) and uncover some kind of demand". Also bearish for cotton was news that investors dumped the euro for a third day as moves by officials to stem the European debt crisis failed to allay concerns of contamination spreading to Italy and Spain.
Traders said the market continued to monitor conditions in Texas and the debate in the trade would now turn to how much of the US cotton crop would be harvested in the autumn. Open interest in the ICE futures cotton market stood at 137,940 lots as of July 11, ICE Futures US data showed. Volume traded on Monday stood at 10,155 lots, it added.
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