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NY cotton ends at 2-1/4 yr low on euro zone, China
May 30, 2012 / 7:08 PM / 5 years ago

NY cotton ends at 2-1/4 yr low on euro zone, China

* Market stumbles as weak outside markets hits cotton
    * China saying stimulus unnecessary, Europe crisis weighs

    May 30 (Reuters) - Cotton futures settled at a 2-1/4 year
low Wednesday on investor liquidation tied to the euro zone debt
crisis and news that China believes it does not need financial
stimulus to sustain growth, brokers said.  	
    Benchmark July cotton on the ICE Futures U.S.
exchange fell 1.89 cents, or 2.6 percent, to end at 70.91 cents
per lb after ranging from 70.38 to 73.15 cents.	
    It was the lowest settlement for the spot cotton contract
since early February 2010, according to Thomson Reuters data.	
    New-crop December cotton lost 1.02 cents to finish at
70.28 cents, dealing between 69.42 and 71.57 cents.  	
    Jobe Moss, a long-time analyst for brokers and merchants MCM
Inc in Lubbock, Texas, said the market crumbled over news that
stocks and commodities sold off due to fears over the deepening
euro zone debt crisis and that China does not need
massive fiscal stimulus to stabilize growth. 	
    "Those two things set off a negative cloud over
commodities," said Moss. "They're seeing an economic contraction
and it (the selling) is contagious."	
    Cotton had staged a modest recovery over the past few
sessions, but that quickly dissipated when the news from Europe
and China hit, dealers said.	
    The 14-day relative strength index reading stood around 25,
from the previous reading of 29. A reading of 30 or lower means
the market is oversold and one of 70 or above indicates a market
is overbought.	
    The market is now looking toward release of the weekly
export sales report from the U.S. Agriculture Department later
in the week to see if there are any cancellations of orders by
China, the world's top cotton consumer.	
    Volume on Wednesday reached almost 39,200 lots, two-thirds
over the 30-day norm and on track for its highest daily trading
volume since May 11, Thomson Reuters and ICE Futures U.S. data
    Open interest in the cotton market, an indicator of investor
interest, amounted to 191,976 lots as of May 29, ICE data
 (Reporting by Rene Pastor; editing by Jim Marshall)

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