ICE cotton has biggest weekly loss since May 2012
NEW YORK Aug 23 (Reuters) - Cotton futures eased on Friday bringing the decline for the week to nearly 10 percent, the biggest loss since May 2012, as speculators liquidated long positions.
The benchmark December cotton contract on ICE Futures U.S. showed little change for a second day after huge losses earlier in the week, closing down 0.10 cent, or 0.1 percent, to settle at 84.08 cents a lb on Friday.
Cotton futures fell by the daily limit on Tuesday and posted steep losses on Wednesday as open interest fell sharply. Speculators sold after pushing prices up 9 percent, to a five-month high of 93.72 cents a lb last Friday, during an eight-session rally.
Easing global supply concerns and a failed test of Friday's highs took the wind out of the rally this week, dealers said.
"The speculators just bought, bought, bought, and then they backed away and there was not enough buying to hold us up," said Jobe Moss, a broker with MCM Inc. in Lubbock, Texas.
Speculators boosted their bullish bet in cotton to the highest level since March in the most recent reporting week which ended on Tuesday, but a large drop in open interest and falling prices were taken as evidence that many have since turned sellers, dealers said.
A U.S. crop progress report on Monday was better than expected and traders' expectations of huge output in the second largest producer, India, eased the supply concerns that had helped fuel the rally.
Worry that high prices would destroy demand further drove investor liquidation, dealers said. U.S. government weekly export sales data were seen as evidence of slower demand amid the price run-up.
Concerns have mounted over U.S. output as the market awaits what is expected to be the smallest crop in four years. The USDA last week reduced its outlook for U.S. and global production.
A sense of tight supplies outside of China has grown because of a government stockpiling program in the world's top textile market. Beijing began a stockpiling program in 2011, paying above global prices to support farmers.
While the world is forecast to hold record global inventories of almost 94 million bales by the end of July 2014, more than 60 percent of those are expected to become part of China's stocks. (Reporting by Chris Prentice)
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