Cotton futures finished Monday at a 9-month low due to debt woes in the US and Europe as the historic rally in the market appears to be at an end, analysts said. Cotton had posted its sixth straight weekly loss last week and the biggest single weekly decline since December 2008, as demand destruction from the market's runup to a record over $2 per lb hit fibre contracts.
"The macro picture is lousy and there is no way to get around that," said Sharon Johnson, senior cotton analyst at commodities brokerage Penson Futures in Atlanta, Georgia.
World stocks and the euro stumbled Monday while gold prices scaled a record top as fears about a global crisis mounted if there are no solutions to the European and US debt crisis. The key December cotton futures on ICE Futures US plunged 2.62 cents to end at 96.46 cents per lb, dealing from 94.46 cents to $1.0073.
It was the lowest close for the second-position contract since early October 2010, Thomson Reuters data showed.
Business was brisk. Total market volumes hit around 24,500 lots at 2:51 pm EDT (1851 GMT), more than a quarter above the 30-day norm, Thomson Reuters preliminary data showed. Cotton futures recovered off its lows on commercial buying in options and futures, but the attempt to nudge the market back above $1 faded and a late speculative selling spree knocked the market down to near its low for the day, dealers said.
Mike Stevens, an independent cotton analyst in Louisiana, said the December contract was trying to fill a gap around $1.0345 to $1.0446, but just could not reach that level.
"When we could not get any traction going higher, we just fell apart late and then hit (automatic sell order) stops on the way down," a trader said. Open interest stood at 134,008 lots as of July 15, down when compared to the previous session's 135,977 lots, data from ICE Futures US showed.
Volume traded on Friday stood at 27,650 lots, more than double the prior day's 12,903 lots, the exchange said.
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