New York, Dec 24 : Cotton futures on the New York Cotton Exchange settled sharply in active trading led by long liquidation from speculative commodity funds, said participants. The sell-off was triggered by unconfirmed reports that an Indian official said the country's cotton imports in 2000-01 will be 30 per cent lower. "That plays into market fears that world consumption will fall this year," commented a trader in Atlanta, noting that light industry buying in the lows held off the slide. "Once they took out the support at 64.80 cents (March basis) it was easy for them to trash it," said a broker in Chicago, referring to the sell-off by the funds. Traders also noted that a recent report by the US Department of Agriculture (USDA) pointing to abundant stocks continued to weigh on the market. Earlier this month, the USDA fractionally lowered its 2000-01 US Cotton crop and world crop to 17.39 million 480-pound bales and 86.63 million bales from the 17.51 million and 86.68 million bales, respectively.(Dow Jones) in its previous report. (DowJones)Domestic production is still above the 16.97 million bales estimated for the 1999-2000 season.But despite the minor downward revisions in production, the government left the US ending stocks, or the remaining stocks at the end of the crop year, unchanged at 3.90 million bales and raised the world ending inventories to 35.69 million bales from 35.10 million bales.
Also hurting sentiment are the persistent signs that the US economy is slowing, which in turn will likely trim further domestic consumption, said traders.
The Cotlook A index wasn't available on Friday. On Thursday it closed at 65.95 cents per pound.
Even on Thursday, the trading touched lower, amid light selling from small and large speculators, with trade houses reported on both sides of the market, said participants.
Participants expressed disappointment over the market's performance despite market friendly news released this week.
Volumes were modest with over 5,000 lots traded, as the market entered the quiet holiday mode, said traders. Trading was reported to be active in the morning but fizzled towards mid-session before the exchange halted operations for a fire drill, said participants.
"I'm dissappointed with the price performance this week,"said Mr Keith Brown, principal at commodities trading firm Keith Brown & Co. in Atlanta.He argued that despite benign data from the US Department of Agriculture's weekly exports report and a low percentage of longs held by funds now, the market has failed to rally."The USDA data was better than decent and the specs longs percentage was down enough," to make the market less prone to a sell-off, he said. He also noted the market hasn't capitalized on a weakening dollar, which makes US cotton cheaper than some Asian producers'.Nonetheless, he said the commodity continues to be well supported by trade buys at around 64.50-64.90 cents a pound, and said he expects the March contract to break out of its current range of 64.00-67.00-cents a pound , by early January.
US exporters reported upland cotton sales of 156,200 running bales during the week of December 8-14 for delivery in the current marketing year, 82 per cent above the prior week's sales and 66 per cent above the four-week average, the USDA said.
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.
