Cotton futures slipped over 2 percent Friday on rumours that world's top consumer China is preparing to auction off some of its vast stockpile of the natural fibre next month, potentially unleashing fresh supply on a saturated global market. Traders said talk was circulating that Beijing had indicated plans to release about 8 million bales of cotton in late April.
While that is only a small portion of the state's reserve of about 60 million bales, it renewed concerns that the release would curb China's appetite for the fibre. "All this means is the largest buyer of cotton in the world is now going to take her own cotton," said Georgia-based cotton broker Keith Brown. It was not possible to confirm the rumour through official channels due to the late hour.
Speculators upped a bearish bet in cotton to the biggest on record in the week ended March 15, US government data showed on Friday. The front-month May contract on ICE Futures US settled down 1.2 cents, or 2.06 percent - the biggest percentage loss in more than a week - at 57.16 cents per lb, after touching a low of 56.82 cents. The contract ended the week down about 3 percent. The dollar index was up 0.29 percent. The Thomson Reuters CoreCommodity CRB Index, which tracks 19 commodities, was down 0.74 percent. Speculators boosted their net short position in cotton by 3,952 lots to 40,488 lots, according to Commodity Futures Trading Commission data, as prices touched fresh 2009 lows. That was the largest net short position in fiber since records dating back to 2006.