NEW YORK: US cotton futures closed down 1 percent, pressured by the broad selloff in commodities on Monday and an extension of the weak demand for cotton seen since last week.
The market was likely to fall further in coming sessions, although it could also turn positive by mid-June, when a better assessment could be made of damage caused to the US cotton crop by this month's flooding and drought, traders said.
The key July cotton contract on ICE Futures US settled down 1.72 cents, or 1.1 percent, at $1.5389 per lb, dealing from $1.5747 to $1.5321.
New-crop December finished unchanged at $1.1976, moving between $1.1850 and $1.2178.
Other industrial commodities such as oil and copper fell more sharply, losing as much as 3 percent each, as Europe's debt crisis and further signs of a slowdown in China hit investor confidence.
"Cotton's held remarkably well today, considering the circumstances," said Mike Stevens, an independent cotton analyst in Mandeville, Louisiana.
"I expect the July contract to be trading $1.70 upwards and December around $1.40 over the next few weeks, if demand returns and we have a better idea of how the crop fared with all these weather problems."
Monday's cotton volume on ICE Futures US was 70 percent below the 30-day average, Thomson Reuters' preliminary data showed.
Farmers along the swollen Mississippi River have had to contend with severe floods lately that have drowned thousands of acres of cotton. The actual number of acres lost in both Texas and the US Delta states will not be known until the middle of June, analysts said.
December and the back months in the cotton market are being supported by a severe drought savaging cotton crops in Texas, the biggest cotton growing state in the country.
Copyright Reuters, 2011