ICE cotton futures hit fresh three-year lows on Friday in low volume trading on projections for higher output even as the natural fiber battled demand woes.
The most-active cotton contract on ICE Futures US, the second-month December contract hit a low of 62.65, levels not seen since May 2016.
Prices fell 0.16 cent, or 0.25pc, to 62.92 cents per lb as of 01:52 p.m EDT (1753 GMT).
The monthly World Agriculture Supply and Demand Estimates (WASDE) report on Thursday projected higher global ending stocks for 2019/20 crop year.
“There is basically lack of interest in cotton as there is nothing compelling from what we saw from WASDE. There doesn’t seem to be a problem with the crop,” said Sid Love, commodity trading adviser at Kansas-based Sid Love Consulting, adding that the production projection was high.
“There were expectations that we could bounce back but we didn’t.
There is no compelling news for anything … you don’t get an awful lot of interest in selling market short.
If you got a bullish story going, it’s easier for managed money positions to come in and get going. An upward trend usually attracts speculators,” Love said.
Total futures market volume fell by 6,429 to 13,634 lots.
The December contract was down 5.6pc so far this week, registering its biggest weekly loss since week-ending May 10.
“The trade remains severely under-hedged and it therefore can’t afford to buy the market at this point. Index funds are already long and their position only changes because of money flowing in and out of commodity baskets or because of rebalancing,” British merchant Plexus Cotton said in a research note.
“This leaves only speculators as a potential source of buying, but with the market resuming its downtrend this week after a two-month break, there is currently no reason for speculators to cover their shorts and to go long.”
Lack of domestic demand as well as a long-drawn trade war between the United States and China has pushed cotton prices down over 14pc so far this year.
Certificated cotton stocks deliverable as of July 19 totaled 63,568 480-lb bales, down from 64,028 in the previous session.
Copyright Reuters, 2019
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