Cotton futures fell for the first time in five sessions on Friday, unravelling from the prior session's two-month high, as investors gear up for a key government crop report early next week. The key December cotton contract on ICE Futures US fell 1.76 cents or 1.55 percent to finish at $1.1187 per lb, after dealing between $1.1044 and $1.1425.
The price weakness originated in Asian markets, with the three-month rolling cotton contract on the Zhengzhou Commodity Exchange falling away from a six-week peak hit on Thursday. Chinese analysts expect the country's cotton output in 2011/12 crop year to be 7.4 million tonnes, 17.8 percent higher than their estimate for 2010/11, according to a survey of six analysts contacted by Reuters on Friday.
A less-than-inspiring weekly sales report from the US Department of Agriculture (USDA) added to the downside pressure, analysts said. "The shipments were just not all that impressive," said Mike Stevens, an independent cotton analyst in Mandeville, Louisiana. He also cited stiff technical resistance following the market's breakout above the $1.13 level on Thursday.
Attention now will turn to the release of the USDA's monthly supply/demand report on Monday, September 12, especially since most of the trade discounted the figure for US 2011/12 cotton production in the August data as being too high. Stevens said the report will "likely have major price implications as to near-term direction." Floods in major cotton producer Pakistan may have destroyed up to two million cotton bales, or about 13 percent of its estimated crop, government and industry officials said on Friday.