Cotton prices drop on speculator selling, orange juice gains
Sunday, 20 June 2010
NEW YORK, June 19 (Bloomberg): Cotton prices fell the most in two weeks on signs that speculators reduced their holdings. Orange- juice futures advanced.
Cotton closed below its 100-day moving average Thursday. In the week ended June 8, hedge-fund managers and other large speculators lowered their net-long positions, or bets prices will rise, to the lowest level in nine months.
"We have lost momentum and broken some short-term technical support and may see some follow-through in specs getting out of positions," said Peter Egli, the director of risk management in Chicago for UK-based Plexus Cotton Ltd.
Cotton for December delivery fell 0.47 cent, or 0.6 per cent, to 78.95 cents a pound on ICE Futures US in New York, the biggest drop for a most-active contract since June 4. Earlier, the commodity fell to 78.29 cents, the lowest level since June 10. The fiber, little changed for the week, has climbed 4.4 per cent this year.
US production will be 16.7 million bales in the year that begins August 1, up from an estimated 12.2 million in the current season, according to the Department of Agriculture. Next season's output may be "raised considerably" amid favorable conditions, especially for plants in Texas, Egli said Thursday in a report. The state is the biggest US grower. (A bale weighs 480 pounds, or 218 kilograms.)
"We don't remember having seen a better Texas crop ever," Egli said. "Plenty of subsoil moisture, a great start, low abandonment and intermittent rainfall are all combining to what promises to be a record yield."
The December contract is "likely to retreat" because of the size of the crop in the US, the world's largest cotton supplier, he said.
Orange-juice futures for September delivery gained 0.15 cent, or 0.1 per cent, to $1.4425 a pound in New York. The commodity gained 0.6 per cent for the week and 78 per cent in the past 12 months.
Cotton closed below its 100-day moving average Thursday. In the week ended June 8, hedge-fund managers and other large speculators lowered their net-long positions, or bets prices will rise, to the lowest level in nine months.
"We have lost momentum and broken some short-term technical support and may see some follow-through in specs getting out of positions," said Peter Egli, the director of risk management in Chicago for UK-based Plexus Cotton Ltd.
Cotton for December delivery fell 0.47 cent, or 0.6 per cent, to 78.95 cents a pound on ICE Futures US in New York, the biggest drop for a most-active contract since June 4. Earlier, the commodity fell to 78.29 cents, the lowest level since June 10. The fiber, little changed for the week, has climbed 4.4 per cent this year.
US production will be 16.7 million bales in the year that begins August 1, up from an estimated 12.2 million in the current season, according to the Department of Agriculture. Next season's output may be "raised considerably" amid favorable conditions, especially for plants in Texas, Egli said Thursday in a report. The state is the biggest US grower. (A bale weighs 480 pounds, or 218 kilograms.)
"We don't remember having seen a better Texas crop ever," Egli said. "Plenty of subsoil moisture, a great start, low abandonment and intermittent rainfall are all combining to what promises to be a record yield."
The December contract is "likely to retreat" because of the size of the crop in the US, the world's largest cotton supplier, he said.
Orange-juice futures for September delivery gained 0.15 cent, or 0.1 per cent, to $1.4425 a pound in New York. The commodity gained 0.6 per cent for the week and 78 per cent in the past 12 months.