* Buyers absent from market during Chinese new year
* Cotton market may establish some downward momentum -
* May-March spread widens for 3rd straight session
By Chris Prentice
NEW YORK, Feb 13 Cotton prices fell for a second
day on Wednesday, due to market consolidation and an absence of
buyers in China, the world's largest consumer, during the new
The most-active May cotton contract on ICE Futures U.S.
dropped 0.89 cent, or 1.1 percent, to settle at 82.21
cents per lb. Earlier in the session, it fell as low as 81.35
cents a lb, the benchmark contract's lowest intraday price since
Wednesday marked the fiber's second daily loss this week.
Last week, cotton posted a weekly loss for the first time this
year, stemming its longest bull run since early 2011. That
recent five-week rally left cotton prices butting up against
highs of about 84 cents a lb.
"China is on vacation. So buyers are not inquiring for
cotton. The other part is that prices were overdone. We may be
establishing a new trend, and it's overdue," said John Flanagan,
an analyst at Flanagan Trading Corp. in North Carolina.
Speculators pushed cotton prices up about 7 percent since
the start of the year, increasing their long position in the
cotton market to a 2-1/2-year high in the week up to Feb. 5.
But a global surplus, forecasts of high global
carryover stocks at the end of the crop year and competition
from lower-priced alternatives have underpinned the cotton
"There's a consolidation pattern here. It would really take
some bullish news to push (the price) up, and there isn't any,"
said Nick Gentile, senior partner of commodity trading
consultancy Atlantic Capital Advisors.
Cotton received an upward push at the start of the week from
U.S. government and industry group forecasts of lower plantings
for next year's U.S. crop, but those projections are more
bullish for the 2013/14 cotton marketing year, rather than the
Exchange stocks continued to grow, totaling nearly 204,000
480-lb bales as of Feb. 12, holding at highs not seen since May
2011. Another 76,000 bales awaited U.S. Department of
Agriculture review on Wednesday. The first notice date for
delivery against the March contract is set for Feb. 22.
The presence of those readily available stocks has pressured
The spot March contract, which held an open interest
above 57,000 lots, closed down 0.99 cent, or 1.2 percent, at
80.82 cents a lb on Wednesday.
The spread between the benchmark May contract and the spot
March contract widened for the third straight session to 1.39
cent, the largest premium the second-month held to the spot
contract since November.
Trading volumes were heavy on Wednesday, despite China's
absence from the market, partially because it was the last day
of the index fund rolls.
More than 55,000 contracts were traded, compared to a
250-day average of under 19,000, according to preliminary
Thomson Reuters data.
(Reporting By Chris Prentice; editing by Gunna Dickson)