* Specs exiting longs ahead of harvest, traders say
NEW YORK, Sept 26 (Reuters) – Seasonal and speculative selling in cotton accelerated on Wednesday, sending futures contracts below 71 cents per pound for the first time since the start of August.
Falling for a fifth straight session, New York-traded cotton for December delivery settled down 1.31 cent, or 1.8 percent, at 71.02 cents per lb on ICE Futures U.S., its lowest level since Aug. 3. Prices briefly dipped as low as 70.98 cents.
“The specs are getting out of their long position. They’re going short and rightly so,” said Lou Barbera, cotton analyst at ICAP Cotton in New York, referring to the less-than-upbeat outlook for the market, with expectations of a record surplus above 76 million bales for the season to end-July next year.
Volumes were healthy with almost 20,000 lots of the December contract changing hands on the day on hefty two-way action.
Selling by commercial hedgers such as farmers has grown as harvest in the northern hemisphere approaches, although mill purchasing has capped some of the slide, traders said.
Speculators cut their net long position in cotton for the second straight week in the week to Sept. 18, the most recent data showed, falling by 2,166 contracts to 17,763 contracts. Specs have not had a net short position since the start of August.
The market tracked a weak broader market. The 19-commodity Thomson Reuters-Jefferies CRB index dropped 0.97 percent while U.S. equities eased 0.6 percent.
The latest pressure has erased the small gains prices had notched up for the third quarter. The market was on track to end the quarter down 0.4 percent, building on the 21-percent plunge seen in the second quarter. Friday is the last day of trading for the month and quarter. (Reporting by Josephine Mason; Editing by Tim Dobbyn)