NEW YORK: ICE cotton touched its lowest price since late January and extended its longest slide in three years, as technical weakness drove long liquidation and signaled a slowdown to a four-month, speculator-driven rally, dealers said.
The most active July cotton contract on ICE Futures US slipped to 79.87 cents a lb, the lowest level for the front-month contract in four months.
The contract settled down 0.57 cent, or 0.7 percent, at 80.13 cents per lb, as chart weakness continue to drive long liquidation, dealers said.
Cotton pared the day's earlier losses to close just above technical and psychological support at 80 cents, according to dealers.
Prices have closed down each of the last eight sessions, the front-month contract's longest slide since June 2010.
Investment by speculators helped pushed cotton to a first-quarter rally of about 18 percent, but has since slowed during a commodities selloff as investors turned to equities markets.
Spot prices have tumbled more than 14 percent from a 1-year high of nearly 94 cents touched in mid-March.
"Nobody is stepping up to the plate (to buy). The technical charts look awful," said Peter Egli, director of risk management for Plexus Cotton Ltd, a British-based medium-sized merchant.
He said that a drop to 78 to 80 cents could prompt mill buying and provide support, as futures prices near cash prices.
The December/July spread widened to 2.7 cents a lb, up from 2.68 cents previously.
The ICE December cotton contract closed down 0.55 cents, or 0.7 percent, at 82.83 cents a lb.
Spread-related dealings have added pressure to spot prices as open interest moves from the benchmark July contract.
Dealers eyed US government weekly export sales data due on Friday that would indicate how active foreign mill buying has been during the recent slide.
Cotton bulls have said that existing US supplies could be strained if the steady pace of exports continues, particularly to China, the world's largest textile market.
But exchange stocks totaled more than 500,000 bales on Wednesday, according to ICE data, easing some concern over near-term supplies.
