Cotton futures settled easier on Tuesday on investor and speculative sales as weakness in outside markets kept fibre contracts on the defensive in an otherwise rangebound session, analysts said. The benchmark May contract on ICE Futures US lost 1.18 cents or 1.1 percent to conclude at 87.90 cents per lb, dealing from 87.43 to 89.10 cents.
Volume traded on Tuesday came to slightly more than 18,200 lots, about a quarter below the 30-day norm, Thomson Reuters data showed. "I think the selling is in sympathy with everything else," said Mike Stevens, an independent cotton analyst in Louisiana.
Fresh concerns about China's economic growth weighed on global stock markets, while oil fell more than 1 percent on expectations Saudi Arabia would act to stem any rise in crude prices that could hurt the world economy. Technically, the inability of the May contract to get past its 20-day moving average at 89.17 cents pressured the market, analysts said.
Open interest - an indicator of investor exposure - in cotton rose for a ninth straight session to 186,108 lots as of March 19, the highest since February 15, ICE Futures US data showed. Investors appear to be expanding short positions in cotton, betting prices will fall further due to bearish fundamentals, traders said.
The US Commodity Futures Trading Commission said net short positions in the cotton market stood at 7,553 lots, against a net long position of more than 14,000 lots at the start of February. The bearish outlook for cotton was emphasised by the US Agriculture Department's monthly supply report, which raised its world 2011/12 cotton production forecast to 123.64 million 480-lb bales from 123.34 million, and cut its projection of world consumption to 108.72 million bales from 109.71 million. It raised its forecast of world end-of-season stocks to 62.32 million bales from 60.77 million. The 2011/12 marketing year ends on July 31.
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