Cotton futures tumble to 1-week low on China tightening measure


Futures Pros – Cotton futures were down for a second consecutive day on Monday, falling to a one-week low, amid speculation over decreased demand after China tightened monetary policy.
On the ICE Futures U.S. Exchange, cotton futures for March delivery traded at USD1.4216 a pound during European afternoon trade, tumbling 1.31%.
It earlier fell to USD1.4120 a pound, the lowest price since January 9.
On Friday, the People’s Bank of China announced that it increased lenders’ reserve requirements for the fourth time in two months in an effort to curb inflation and cool its rapidly growing economy.
China is the world’s largest cotton consumer.
Meanwhile, the U.S. Department of Agriculture raised its estimate for total U.S. cotton supplies for the first time since October in its World Agricultural Supply and Demand Estimates report released last week.
According to the report, the USDA now expected U.S. cotton supplies in the 2010-11 season ending August 1 to total 18.32 million bales, up from 18.27 million bales projected in December.
Total U.S. cotton supplies in the previous marketing season totaled 12.19 million bales, a 16-year low. The U.S. is the world’s second largest cotton producer and the world’s largest exporter.
Elsewhere, the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.18% during European afternoon trade. 
A stronger dollar reduces the appeal of U.S. crops to overseas buyers and makes commodities less attractive as an alternative investment.
Meanwhile, wheat futures for March delivery slumped 1.07% to trade at a two-day low of USD7.7338 a bushel, corn futures for March Delivery climbed 0.80% to trade at a 30-month peak of USD6.4962 a bushel, while soybeans for March delivery added 0.10% to trade at USD14.2300 a bushel during European afternoon trade.