US cotton futures reeled from investor sales to finish lower Wednesday as another round of liquidation hit the commodities sector, analysts said. The key July cotton contract on ICE Futures US dropped 1.10 cents to settle at $1.503 per lb, dealing from $1.4776 to $1.5512. The new-crop December cotton futures shed 0.73 cent to close at $1.2519 cents.
Volume traded stood at around 17,600 lots, about a quarter below the 30-day norm, Thomson Reuters preliminary data showed. "The spillover from crude, silver and gold and the sharply higher dollar hit cotton," said Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia.
For the second week in a row, a flurry of liquidation sell orders battered the commodity sector and put fibre contracts under pressure. Those losses were pared by sustained trade and possible mill buying, dealers said. The US Agriculture Department's monthly supply/demand report elicited almost no reaction in the market.
Brown said the USDA's forecast of a rise in world cotton ending stocks in the 2011/12 marketing year (August/July) to 47.93 million (480-lb) bales from 42.52 million bales in 2010/11 was a "little negative" for futures. But the impact of the number was muted by the fact it is a projection and that can easily change as the next season kicks off, analysts said.
The market will be turning its attention to the USDA's weekly export sales report to see if any more cotton sales are cancelled, as has happened in the last few USDA reports. The level of investor interest in the cotton market appears to be gradually recovering. Open interest in the cotton market rose to 150,102 lots as of May 10, from the prior rally of 148,600 lots, data from the ICE Futures US showed. Open interest stood at 147,578 lots on May 6 which is the lowest level since October 2009, ICE Futures US said. Volume came to 19,551 lots as of May 10 versus the previous tally of 12,006 lots, exchange data showed.
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