ICE cotton futures slid 1.5 percent on Friday in their biggest one-day percentage loss since late October, as traders booked profits after prices rose above the key 80-cent level for the first time since June 2014. Cotton futures also fell 0.8 percent for the week to snap a streak of 10-straight weekly gains, the longest such streak for the commodity since at least the end of 2005, according to data on Thomson Reuters Eikon.
"We were above the psychologically important 80-cents which caused producers to sell cotton and speculators to take profits," said Keith Brown, principal at cotton brokers Keith Brown and Co in Moultrie, Georgia. "The market is breaking on its own weight."
The most active ICE cotton contract for March expiry settled down 1.24 cent, or 1.56 percent, the biggest one-day percentage drop since October 26, at 78.01 cents per lb. Cotton futures touched a session best of 80.05 cents a lb, a peak since June 2014 and an all-time high for the March contract. "The trade has been waiting for a meaningful correction for the last six weeks, but the market hasn't given back much more than a cent or two a couple of times," Plexus Cotton said in a note.
"This is clearly frustrating the shorts and/or mills who still need to fix a lot of cotton, and over the last couple of sessions we have seen some fixations move up to the market." The US Department of Agriculture (USDA) on Friday reported exports of 208,500 running bales (RB) in the week of December 28 were down 25 percent from the previous week and 1 percent from the prior 4-week average. However, net sales of 193,900 RB for 2017/2018 were up 19 percent from the previous week.
Meanwhile, total futures market volume rose by 13,114 to 39,244 lots. Data showed total open interest gained 2,519 to 285,426 contracts in the previous session. Certificated cotton stocks deliverable as of January 4 totalled 47,665 480-lb bales, up from 47,589 in the last session.
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