US cotton futures ended down for a third straight session on Thursday, under pressure from a disappointing weekly export sales report. The key May cotton contract on ICE Futures US fell 1.31 cents to settle at $1.9604 per lb, after dealing from a near two-week low at $1.9406 to $1.9788.
Second-position July dropped 2.64 cents to close at $1.78 per lb, while new-crop December cotton shed 2.25 cents to end at $1.3245. Total volume traded in the cotton market slowed to 19,295 lots, about a quarter below the 30-day norm, Thomson Reuters preliminary data showed. Analysts said recent market weakness was sustained following the release of the weekly export sales report from the US Department of Agriculture (USDA).
The USDA said there was a reduction of 96,300 running bales (RBs, 500 lbs each) for the current crop and net sales reached 165,800 RBs for delivery in 2011/12, well below trade estimates calling for sales between 250,000 and 325,000 RBs. Mike Stevens, an independent cotton analyst in Louisiana, said export cancellations continued to emphasise that $2-plus cotton was sufficient to curtail demand.
Traders also cited concerns about more cotton coming into the market from major Southern Hemisphere growers such as Australia, Brazil and Argentina. Australia could harvest another bumper cotton crop next year, possibly matching this year's estimated harvest of a record 4 million bales, an industry official said on Thursday, noting that growing conditions remained ideal. Weather concerns in the US Southwest continued to offer fundamental support.
Data released on Thursday morning by a consortium of national climate experts said a lack of rain had caused a drought to expand over the last week to "extreme" and even "exceptional" levels in parts of Oklahoma and Texas. Open interest in the cotton market slowed to 197,502 lots as of April 13, but remained well within reach of the two-month peak at 200,051 lots hit last week, data from ICE Futures US showed.