* Cotton to see more losses on limit-down move
May 22 (Reuters) – Cotton futures settled Tuesday limit down at a 2-1/4-year low on speculative liquidation, with bearish fundamentals casting a pall on fiber contracts, analysts said.
Key July cotton on the ICE Futures U.S. exchange dropped the 3-cent daily limit to end at 71.52 cents per lb, with the session top at 78.01 cents.
New-crop December fell the same to finish at 74.57 cents, with the day’s high at 75.10 cents.
Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia, said there seems to be a rising awareness in cotton of how burdensome world 2012/13 cotton ending stocks could be.
The U.S. Agriculture Department had forecast world ending cotton stocks in 2012/13 at a record 73.75 million (480-lb) bales.
“Sharply lower prices in China overnight … and a strong dollar put pressure on cotton prices early. Sell stops triggered when cotton moved into new contract lows,” a report by independent analyst Mike Stevens said.
Brown said the weaker cotton prices could finally generate or inspire the kind of consumer business which could stabilize cotton futures.
Traders said the market’s next move will depend on the lingering euro zone debt crisis. Still, the limit-down move could lead to further losses.
The 14-day relative strength index reading stood near 24 from the previous tally of 29. A reading of 30 or below normally means a market is oversold and one of 70 or higher means it is overbought.
Volume on Tuesday reached almost 23,000 lots, 5 percent below the 30-day norm, Thomson Reuters data showed.
Open interest amounted to 189,230 lots as of May 21, up for the third session running and at its highest level since April 16, ICE Futures U.S. exchange data showed.
(Reporting by Rene Pastor; Editing by John Picinich)