NEW YORK: ICE cotton futures tumbled over 4.5% to trade limit down on Thursday, pressured by a weak export sales data and a stronger dollar.
The most active cotton contract on ICE Futures US, the front-month May contract fell 4.00 cents, or 4.9%, to 78.44 cents per lb at 12:23 p.m. EDT (1623 GMT), its lowest since Jan. 4.
The July contract slumped 4.8% to 79.52 cents.
Intercontinental Exchange Inc has set the Daily Price Limit for all Cotton No. 2 futures delivery months at 4 cents per pound above and below the prior day settlement price.
“After the report, it (cotton) really started selling off pretty aggressively. New sales were definitely a bit lower and we saw cancellations from China,” said Bailey Thomen, cotton risk management associate with StoneX Group.
The US Department of Agriculture’s weekly export sales report showed that net sales of 271,200 running bales (RB) for 2020/2021 were down 38% from the previous week, with a 1,800-RB reduction from China.
The report also showed that exports of 313,500 RB were down 11%. “So, it is a combination of a pullback in demand and also these broader economic and political factors as well,” Thomen said, pointing to concerns regarding US-China relations. The United States is the biggest exporter of cotton, while China is the largest consumer. The dollar index rose to a more than four-month high against key rivals, making cotton costlier for investors holding other currencies. Total futures market volume rose by 30,895 to 61,439 lots. Data showed total open interest gained 2,428 to 232,040 contracts in the previous session.