* Bearish fundamentals keep cotton on defensive
NEW YORK, March 12 (Reuters) – Cotton futures finished lower Monday for the fifth straight session as the market digested the gyrations major producer India has taken on its cotton exports, analysts said.
The benchmark May contract on ICE Futures U.S. declined 0.80 cent to finish at 88.00 cents per lb, dealing from 87.01 to 89.16 cents.
Volume traded Monday reached almost 21,000 lots, about 15 percent under the 30-day norm, Thomson Reuters data showed.
Cotton slid early after news that India had lifted its ban on cotton exports. That soon changed when New Delhi said it would ban fresh cotton and allow only quantities that had already been registered for export but have yet shipped.
India is the world’s No. 2 cotton producer and the biggest exporter after the United States.
New Delhi had imposed a ban on cotton exports last Monday. The decision was challenged by India’s farm minister and the Indian ministers meeting did not immediately decide on the issue.
But the market was oversold and suspected trade and consumer buying seemed to emerge at the market’s lows, analysts said.
The outlook for cotton futures, though, is bearish given market fundamentals.
Jobe Moss, an analyst for brokers and merchants MCM Inc in Lubbock, Texas, said he would not be surprised if cotton prices keep falling and drift below 80 cents in the coming months.
Bearish fundamentals were underscored by last Friday’s monthly supply/demand report from U.S. Agriculture Department.
USDA upped world 2011/12 cotton production to 123.64 million (480-lb) bales from an earlier estimate of 123.34 million, reduced world consumption to 108.72 million bales from 109.71 million, and raised world ending stocks to 62.32 million from 60.77 million bales.
Over the last few months, USDA has been cutting world cotton output and usage, causing stocks to expand.
(Reporting by Rene Pastor; Editing by John Picinich)