NEW YORK, Oct 26: NY cotton futures closed on Thursday near a 30-year low, as option and fund sales deflated a fiber complex buckling from the weight of exceedingly bearish fundamentals.
The buyers have literally backed away (and) I don’t blame them, Jobe Moss of brokers and merchants MCM Inc. in Lubbock, Texas said. We’ve gone from 68 cents (in 2000) to 28 cents, and there’s still too much cotton.
Excessive supplies, nonexistent cotton demand and a recession spawned by the plane attacks in New York and outside Washington last month have sent cotton futures into a near free-fall, brokers said.
December cotton was last traded at 28.52 cents a lb, down 0.57 cent while dealing between 28.95 and its new lifetime low of 28.50 cents.
Market operators said it was the lowest close for cotton prices since futures finished around 26 cents in 1972.
March dove to a new low of 30.20 cents before finishing at 30.22 cents, off 0.53 cent. All of the back months set new lifetime lows, with losses running from 0.50-0.67 cent.
Cotton futures tumbled from the opening bell, with option-related pressure in the March contract and fund selling overwhelming scale-down commercial buying in the market, brokers said.
Moss said cotton may be in for more pain, since cotton harvest pressure in the United States is peaking this month and next.
Mike Stevens of Swiss Financial Services in Mandeville, Louisiana said locals were pressing the short side of the market, but they may be getting a little too short for comfort.
The precipitous fall in cotton prices has sparked robust US cotton sales, but they have not been so outstanding as to lift cotton out of its prolonged funk, dealers said.
The weekly USDA cotton export sales report on Thursday showed new upland cotton sales in the week ending Oct. 18 at 177,100 (480-lb) bales, compared with new upland sales in the preceding week of 197,400 bales.
The next level would be around 11 cents, an area last visited in the 1960s, they added.
Technicians said it was almost futile to even calculate resistance levels, but felt it would emerge at 29.50 and 30 cents.
I think cotton prices are already at more than 30-year lows if you adjust them for inflation, one broker said.
In other news, the National Cotton Council of America said that based on figures from the US Census Bureau, US annualized cotton consumption stood at 7.87 million bales.
In its October monthly production report, USDA forecast US cotton consumption in 2001/02 at 8.3 million bales.
For the first time in several sessions, the Cotlook A Index used by the trade as an indicator of global cotton demand did not fall and was traded Thursday unchanged at 35.50 cents.
Floor dealers estimated final volume traded at some 9,500 lots, compared with the previous tally of 7,018 lots.—Reuters
