NEW YORK, Nov 11 (Reuters) - U.S. cotton futures slid on
Thursday as the market extended its losses due to investor
sales and profit-taking, with sharply lower Chinese cotton
prices and a rise in U.S. cotton market margin rates weighing
on fiber contracts after its record run, analysts said.
The benchmark March cotton contract on ICE Futures U.S. fell 2.41 cents to trade at $1.387 per lb at 10:17 a.m. EST (1517 GMT), dealing from $1.3691 to $1.428.
The spot December cotton futures was up 0.48 cent at $1.4613 at 10:18 a.m.
The U.S. cotton market on ICE Futures U.S. is still the top performing commodity on the Reuters Jefferies Commodity Index this year, having risen over 80 percent year to date. (Graph: http://link.reuters.com/kew48n)
'It certainly smells and feels like a top,' said Sharon Johnson, cotton expert at First Capitol Group in Atlanta, Georgia. 'But everybody feels cautious.'
She said investors are wary because the market had surged after correcting a few times during its four-month long rally so no one will be declaring the advance dead at this time.
'You're getting the normal correction in the back months,' added Mike Stevens, an independent analyst in Louisiana.
The primary catalyst for the fall on Thursday were sharply weaker cotton prices in China during Asian trade.
The Zhengzhou Commodity Exchange's May cotton contract was last traded Thursday at the session low of 31,345 yuan per tonne, down 1,650 yuan on the day.
Another major factor for the lower market was the increase in cotton margins to its highest level since 1996 , which prompted investors who have seen the market rise nearly 32 cents the last nine days to cash in their gains.
'We've got a lot of money so this a good time to make profits,' said Johnson.
As for spot December, the focus will be on attempts by players to get out of positions in the contract with first notice day for deliveries scheduled for later this month.
The market took note of news that China's Central Bank ordered banks to set aside more money as required reserves, a tightening step that mops up some of the cash that has been flowing into commodities markets and posing a growing inflationary threat.
Chinese cotton traders said cash prices are now running around the same level as futures prices.
10:15 LAST NET PCT LOW HIGH CURRENT
CHNG CHNG VOL CTZ0 146.14 0.49 0.3% 143.63 150.00 7,006 CTH1 138.78 -2.33 -1.7% 136.91 142.80 8,979
TOTAL MARKET VOLUME
CURRENT 30D AVG ICE Cotton 19,867 29,623
(Reporting by Rene Pastor; Editing by Lisa Shumaker) ((rene.pastor@thomsonreuters.com; +1 646 223 6047; Reuters Messaging: rene.pastor.reuters.com@reuters.net))
For related news and prices, click on the codes in brackets: ICE cotton futures RELATED NEWS AND OTHER TOPICS All cotton news Grain/oilseed/cotton news Cotlook Daily All commodities news Grains diary Weather news Foreign exchange rates China cotton China's cotton futures NYMEX cotton Keywords: MARKETS COTTON (For help: Click 'Contact Us' in your desk top, click here or call 1-800-738-8377 for Reuters Products and 1-888-463-3383 for Thomson products; For client training: training.americas@thomsonreuters.com ; +1 646-223-5546) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The benchmark March cotton contract on ICE Futures U.S. fell 2.41 cents to trade at $1.387 per lb at 10:17 a.m. EST (1517 GMT), dealing from $1.3691 to $1.428.
The spot December cotton futures was up 0.48 cent at $1.4613 at 10:18 a.m.
The U.S. cotton market on ICE Futures U.S. is still the top performing commodity on the Reuters Jefferies Commodity Index this year, having risen over 80 percent year to date. (Graph: http://link.reuters.com/kew48n)
'It certainly smells and feels like a top,' said Sharon Johnson, cotton expert at First Capitol Group in Atlanta, Georgia. 'But everybody feels cautious.'
She said investors are wary because the market had surged after correcting a few times during its four-month long rally so no one will be declaring the advance dead at this time.
'You're getting the normal correction in the back months,' added Mike Stevens, an independent analyst in Louisiana.
The primary catalyst for the fall on Thursday were sharply weaker cotton prices in China during Asian trade.
The Zhengzhou Commodity Exchange's May cotton contract was last traded Thursday at the session low of 31,345 yuan per tonne, down 1,650 yuan on the day.
Another major factor for the lower market was the increase in cotton margins to its highest level since 1996 , which prompted investors who have seen the market rise nearly 32 cents the last nine days to cash in their gains.
'We've got a lot of money so this a good time to make profits,' said Johnson.
As for spot December, the focus will be on attempts by players to get out of positions in the contract with first notice day for deliveries scheduled for later this month.
The market took note of news that China's Central Bank ordered banks to set aside more money as required reserves, a tightening step that mops up some of the cash that has been flowing into commodities markets and posing a growing inflationary threat.
Chinese cotton traders said cash prices are now running around the same level as futures prices.
10:15 LAST NET PCT LOW HIGH CURRENT
CHNG CHNG VOL CTZ0 146.14 0.49 0.3% 143.63 150.00 7,006 CTH1 138.78 -2.33 -1.7% 136.91 142.80 8,979
TOTAL MARKET VOLUME
CURRENT 30D AVG ICE Cotton 19,867 29,623
(Reporting by Rene Pastor; Editing by Lisa Shumaker) ((rene.pastor@thomsonreuters.com; +1 646 223 6047; Reuters Messaging: rene.pastor.reuters.com@reuters.net))
For related news and prices, click on the codes in brackets: ICE cotton futures RELATED NEWS AND OTHER TOPICS All cotton news Grain/oilseed/cotton news Cotlook Daily All commodities news Grains diary Weather news Foreign exchange rates China cotton China's cotton futures NYMEX cotton Keywords: MARKETS COTTON (For help: Click 'Contact Us' in your desk top, click here or call 1-800-738-8377 for Reuters Products and 1-888-463-3383 for Thomson products; For client training: training.americas@thomsonreuters.com ; +1 646-223-5546) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.