September 17, 2012 / 10:08 PM / 5 years ago

NY cotton falls lightly in broad commodities selloff

* Market ends down, snapping 2nd day run-up
    * Price drop mild compared to selloff in oil, other
commodities

    NEW YORK, Sept 17 (Reuters) - Cotton futures in New York
fell on Monday, snapping a two-session run-up, but the drop was
mild compared to sharp selloffs in oil and other major
commodities.
    With technical charts showing many commodities at or near
overbought territory, traders dumped positions in key oil,
metals and crop markets. Weak regional U.S. manufacturing data
and worry that high prices may hurt demand contributed to the
selling despite economic stimulus launched in the last two weeks
by the Federal Reserve and European Central Bank. 
    Cotton's benchmark December contract in New York 
settled down 0.57 cent, or 0.8 percent, at 75.33 cents per lb,
moving between 76.77 and 75.12.
    The decline was comparatively small to the fall of up to 3
percent in prices of crude oil .
    Wall Street's S&P 500 index, an indicator closely
watched by cotton investors, also performed better than oil,
shedding just 0.4 percent.
    Trading in cotton was steady, with Thomson Reuters data
showing volume in New York futures up about 8 percent versus the
30-day average.
    "I'm a bit surprised that cotton did not fall more today
given the lack of positive news in the market," said Sharon
Johnson, a cotton specialist at Knight Futures in Atlanta,
Georgia.
    "I can only conclude that we were following the S&P more
closely than oil."
    Fundamentally, the outlook for cotton remained weak.
Long-term concerns about waning demand and a record surplus have
kept prices under 80 cents per lb since May.
    Last week, the U.S. Department of Agriculture increased its
estimate for the global cotton surplus to a record of 76.5
million 480-pound bales due in part to a drop in consumption and
imports by China. 
    The new forecast boosted by nearly 2 million bales last
month's estimate -- already the highest since USDA records began
in 1960. A large carryover from last season was also a factor.
    December cotton was down in the first three sessions of last
week, hitting a one-month low by Wednesday, after the USDA
data. 
    It rebounded slightly on Thursday after U.S. data revealed
the country's biggest weekly export sales for cotton since June.
On Friday, the contract rallied, trimming its loss for the week,
after the Fed launched a $40-billion-per-month bond buying
stimulus program.

 (Reporting by Barani Krishnan; Editing by David Gregorio)

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