Cotton futures sank to the lowest in over a year on Monday after the US government raised its forecast for excess inventories both in the United States, the world's top exporter, and globally, amid lower demand. The US Department of Agriculture (USDA) raised its outlook for world stocks in the year that runs through July, as well as its outlook for carryover stocks in the United States on a lower forecast for shipments abroad in 2015-16.
The lower export forecast fuelled the day's bearish sentiment, according to Peter Egli, director of risk management with British merchant Plexus Cotton. "There's higher ending stocks in the United States, that's what people are reacting to," he said. Global demand is lower due to a slowdown in economic growth and as cotton continues to face competition from low-priced synthetics, Egli said.
The March cotton contract on ICE Futures US settled down 0.96 cent, or 1.61 percent, at 58.64 cents per lb, after hitting 58.25 cents a lb, a contract low and the weakest price since late January last year. Certificated cotton stocks deliverable as of Monday totalled 27,530 480-lb bales, up from 26,928 bales in the previous session. -- The Thomson Reuters CoreCommodity CRB Index, which tracks 19 commodities, was down 2.37 percent.
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