Forexpros – Cotton futures were down for a seventh day on Monday, tumbling to an eight-month low amid ongoing concerns over a slowdown in demand from China, the world’s largest cotton consumer.
On the ICE Futures U.S. Exchange, cotton futures for October delivery traded at USD1.1279 a pound during European morning trade, tumbling 3.17%.
It earlier fell as much as 3.65% to trade at USD1.1233 a pound, the lowest price since November 29, 2010.
Chinese trade data released over the weekend showed that Chinese imports in June grew at the slowest pace in 20 months, underlining concerns the country will import less cotton from the U.S.
A separate report said that Chinese consumer prices rose to a three-year high of 6.4% in June, fuelling expectations the country would do more to curb inflation and cool its rapidly growing economy.
The People’s Bank of China has raised interest rates five times since mid-October, the latest on July 5, and increased banks’ reserve requirements nine times since November to rein in liquidity.
A broadly stronger U.S. dollar also weighed as the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.8% to trade at a two-week high of 76.04.
A stronger dollar reduces the appeal of U.S. crops to overseas buyers and makes commodities less attractive as an alternative investment.
Meanwhile, the International Cotton Advisory Committee, a leading industry group forecast that prices of the fiber, “will decline significantly” in the 2011-12 season, while “probably” staying above a 10-year average of USD0.60 per pound.
In a report published Friday the ICAC said, “The main reason explaining the recent drop of cotton prices seems to be a significant slowing in demand.”
Cotton prices have plummeted nearly 50% since hitting a record high of USD2.197 a pound on March 7.
Elsewhere, wheat for September delivery tumbled 1.7% to trade at USD6.3913 a bushel, corn for September delivery shed 0.68% to trade at USD6.3825 a bushel, while soybeans for August delivery eased down 0.1% to trade at USD13.4550 a bushel.
