ICE Cotton Futures Fall for the Second Day

Cotton fell for a second day on speculation that record prices will curb demand, especially in China, the world's biggest consumer.

U.S. export sales of upland cotton fell to 322,977 bales in the week ended Nov. 25. That's 26 percent below the previous four-week average, while China's purchases were down 23 percent, the U.S. Department of Agriculture said on Dec. 2. Cotton in New York has gained 72 percent this year and prices in China topped $2 a pound as global demand outpaced supplies and inventories plunged in the U.S., the biggest exporter.

"Big buyers have satisfied their needs and are going to wait and see now," said John Flanagan, the president of Flanagan Trading Corp. in Fuquay-Varina, North Carolina. China and Bangladesh may be holding off purchases in hopes of lower prices, he said.

Cotton for March delivery declined 0.05 percent to settle at $1.3037 a pound at 2:33 p.m. on ICE Futures U.S. in New York. Earlier, the price slipped as much as 1.7 percent before paring losses.

Last week, the most-active contract jumped 18 percent, the most since July 1971. On Nov. 10, cotton reached a record $1.5195, before tumbling 12 percent over the next two days.

Futures probably won't fall "too far," Flanagan said. The market "can't go straight up every day," he said.

U.S. stockpiles held in warehouses monitored by ICE increased to 114,360 bales as of yesterday, up 7.3 percent from the day before. Inventories are down 75 percent from the same time a year ago.

China will use 47 million bales in the season that ends July 31, down 6 percent from 50 million the year before, the USDA said in a Nov. 9 report. The Asian nation will import 15 million bales to help meet domestic demand this year, up from 10.9 million last season, the USDA said.

The department will update its projections on Dec. 10. A bale weighs about 480 pounds, or 218 kilograms.

ICE Mar11 Cotton Trend: