Cotton futures join overall commodities drop on macroeconomic worry


* Thomson Reuters-Jefferies CRB down for 4th session

* U.S. cotton export sales unchanged from 4-week average

* Technical support seen near 85- to 86-cent range – broker

NEW YORK, April 4 (Reuters) – ICE cotton fell on Thursday, as weekly U.S. government export data were not seen as strong enough to boost prices and losses across commodities markets weighed.

The most-active May cotton contract on ICE Futures U.S. fell 0.89 cent, or 1 percent, to settle at 88.33 cents per pound.

The Thomson Reuters-Jefferies CRB Index, a commodities benchmark, fell for a fourth straight session as an increase in U.S. weekly jobless claims prompted concern over the state of the recovery in the world’s largest economy.

U.S. weekly cotton sales registered an increase from the previous week, but were unchanged from the prior four-week average.

“The sales figures were so-so. They weren’t extremely impressive, that’s why we saw the initial selloff. And we saw some macro sentiment weighing on things,” said Christopher McGowan, a trader with Newedge in New York.

Net sales of upland cotton totaled 148,300 running bales in the week ended March 28, with increases reported for Turkey, China, Brazil, Thailand and Vietnam.

Traders had said they anticipated strong export data, as the reporting week included a price drop to just above 86 cents, which was expected to boost buying.

U.S. shipments of previously booked cotton reached 361,700 bales, with China, Turkey, Vietnam, Indonesia, Taiwan and Mexico the primary destinations. While that represented an increase from the previous week, it was below the prior four-week average.

Despite the session’s losses, traders and brokers said that cotton’s recent uptrend does not appear to be broken, thanks to strong technical and physical support in the 85- to 86-cent range.

Cotton managed to buck an overall downtrend in commodities during the previous two sessions with investors seen returning to the cotton market. Prices rose, and ICE data showed an increase in open interest during both sessions.

Speculators helped drive cotton’s first-quarter rally of 18 percent. Last month, they increased their bullish stance in cotton futures and options to the highest level in five years.

Cotton’s year-to-date gains follow two years of losses, as lower-priced, manmade alternatives eroded demand for natural fiber and global stockpiles grew.

The world is forecast to see a record global surplus by the end of the crop year, July 31.

That forecast has not deterred the recent rally, as more than half of that surplus is expected to become part of China’s stocks and is considered unavailable to the global marketplace.

China began building its reserves in 2011, paying above global prices to support farmers. (Reporting by Chris Prentice; Editing by Phil Berlowitz)

Source: Reuters