Cotton futures settled easier Monday on investor sales sparked by fears of recession as the market's weak third quarter performance spilled over into the first trading day of the last quarter of 2011, analysts said. The key December cotton contract on ICE Futures US lost 0.98 cent to end at 99.21 cents per lb, trading from 98.25 cents to $1.0065. The market has been pinned in a rough range from 98 cents to $1.0317 over the past five sessions.
The cotton market was the 7th worst performing commodity on the Reuters Jefferies commodity index in the third quarter of 2011. Cotton traded on ICE Futures US posted its worst two quarter performance since 2008, Thomson Reuters data showed. Total volume traded Monday hit almost 12,200 lots, little changed from the 30-day norm, preliminary Thomson Reuters data showed. The main catalyst for the downturn is news that world stocks dropped Monday and the euro slid to an 8-1/2 month low versus the dollar due to growing fears of a Greek default.
"The outside markets are negative," Jobe Moss, an analyst for brokers and merchants MCM Inc in Lubbock, Texas, said when asked about cotton's losses. "The debt crisis throughout the world is the 800 pound gorilla in the room right now and of course that could trump all factors both bullish and bearish," said a weekly commentary by brokers VIP Commodities. "But as far as cotton goes, she's holding steady on some rough seas." Traders said falls in cotton have often run into steady commercial and mill buying below the psychological $1 a lb level.
The amount of investor interest in cotton improved slightly as open interest stood at 151,074 lots as of September 30, up slightly from 149,071 lots on September 29, the exchange said. Total volume on Friday reached 18,981 lots from the previous session's count at 16,867 lots, ICE Futures US data showed.
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