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Cotton futures slump to 3-month low amid demand concerns

Published 11/08/2011, 08:39 AM
Investing.com - Cotton futures extended sharp losses from the previous session on Tuesday to trade at the lowest level since early August, after data showed that U.S. export sales tumbled last week, while the U.S. cotton harvest continued to improve.

On the ICE Futures U.S. Exchange, cotton futures for December delivery traded at USD0.9605 a pound during European afternoon trade, dropping 0.74%.

It earlier fell by as much as 0.85% to trade at USD0.9601 a pound, the lowest price since August 9.

The U.S. Department of Agriculture said in its weekly report, published after markets closed Monday, that that cotton for export inspected at U.S. ports in the week ended October 27 tumbled 56% from a week earlier to 170,930 bales.

USDA data showing that the U.S. cotton harvest was running ahead of its average pace also weighed on prices.

Nearly 70% of the U.S. cotton crop was harvested as of November 6, up from 55% the week before and above the five-year average of 53%.

In Texas, the largest cotton-growing state in the U.S., approximately 67% of the cotton crop was harvested as of last week, compared to 47% a week earlier, while 61% of crops in Alabama, the third-largest grower, were harvested, up from 51% a week before.

The U.S. is the world’s third largest cotton producer and the biggest exporter of the fiber.

Commodity traders were also eyeing Wednesday’s release of monthly inflation data from China. Price increases are expected to soften, fuelling expectations that Beijing could ease monetary policy in the near term. 

Cotton prices have tumbled nearly 55% form a record high of USD2.1970 a pound on March 7, as demand eased in China, the world’s biggest consumer.

Meanwhile, markets continued to eye developments out of the euro zone surrounding the region’s debt crisis.

Italian Prime Minister Silvio Berlusconi’s government faces a key parliamentary vote later in the day, amid growing opposition from within his own political party, while in Greece officials were to announce the new head of an interim government, amid ongoing efforts to avoid a potential default.

Elsewhere, on the ICE Futures Exchange, coffee futures for December delivery rose 0.5% to trade at USD 2.3488 a pound, while sugar futures for March delivery added 0.42% to trade at USD0.2538 a pound.


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