The best-traded December cotton futures contract tumbled
below 74 cents a pound for the first time in nearly two years after US export
sales suffered another poor week, undermined by notably poor demand from China.
December cotton, the best traded contract, fell to 73.71
cents a pound at one point, the weakest since June 2012 and down 2.1% on the
The contract recovering some ground in late deals to stand
at 74.26 cents a pound, down 0.6%.
The decline, which took prices some 13% below their early
May high, followed the release by the US Department of Agriculture of data
showing US export sales of the fibre falling below 28,000 running bales last
Export sales for delivery this season, which ends next
month, came in at just 3,600 running bales, a figure the USDA said was "down
98% from the previous week, and 96% on the prior four-week average".
Small orders by the likes of Indonesia, of 6,300 running
bales, China, of 1,400 running bales, and Morocco were mainly offset by a
cancellation of Japanese and Mexican orders.
While orders often tail off towards the end of the season,
as stocks run low, and often with some concerns over the quality of what is
left, sales were poor for 2014-15 too, at 24,100 running bales.
That figure was down from a figure of 103,300 running bales
the previous week which was itself considered disappointing.
And it, signally, included just 1,300 running bales in
purchases by China, the top importer, whose demand for foreign supplies is
being closely scrutinised for signs of losses to reforms to its cotton subsidy
regime, whose generous payouts to farmers have left the state with huge
'Big question mark'
Indeed, China has "close to 12 months of cotton supply
sitting in warehouse, which may limit imports for the remainder of the year,
and keep demand from China largely sidelined", said Paul Deane at Australia
& New Zealand Bank.
A European soft commodities trader told Agrimoney.com: "It
is not just the low imports overall that have disappointed markets today, but
the lack of Chinese involvement.
"There is a big question mark over how much China really
wants to take in 2014-15, and not that much confidence in the estimates we have
got so far.
"If it turns out the figure is far lower than expected, that
is a lot of cotton needing to find another home. And this when hopes for US
production this year are on the rise too."