Cotton futures closed lower Monday on month-end liquidation and profit-taking as the market eased for the first time in seven sessions and may consolidate after its recent surge, analysts said. The key December cotton contract on ICE Futures US dropped 2.08 cents or almost 2 percent to finish at $1.0229 per lb, moving from $1.0114 to $1.0464.
On Friday, the contract ended at $1.0437 in the highest settlement close for spot cotton in six weeks. For the month, the spot cotton market was up 2.1 percent. Total volume traded Monday hit over 13,200 lots, about 10 below the 30-day norm, preliminary Thomson Reuters data showed. "We backed off. There was no fundamental reason to hold the market up," said Mike Stevens, an independent cotton analyst from Mandeville, Louisiana.
The dollar jumped and global stocks slumped due to fresh worries about the viability of last week's eurozone debt deal to solve the crisis. Cotton also came under pressure from the start of the investment fund roll as players began moving positions out of the December contract and into the forward months.
"All these fund rolls are starting this week," a dealer said. The market also kept an eye on the bankruptcy filed by US brokerage MF Global. "It's always a sad day when things like this happen," said Stevens. Technically, dealers said the December contract remained well supported in the area around $1.01 where possible import orders are lurking. Open interest in cotton, usually taken as an indicator of investor exposure in cotton, stood at 161,414 lots as of October 287, its highest level since June 9, exchange data showed. Total volume traded Friday in the cotton market was 26,389 lots, down from the previous tally of 25,566 lots, ICE futures US data reported.
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