(Updates prices; adds market background in paragraph 9)
NEW YORK, April 10 U.S. cotton export sales
dropped for the first time in almost two years in the latest
reporting week, official U.S. data showed, confirming that high
prices have curbed demand.
The drop in sales helped curtail a price rally seen on
fears of tight nearby supplies that lifted prices to two-year
highs in March.
Buyers from six countries canceled at least 67,500 bales of
upland cotton in the most recent reporting week, data from the
U.S. Agriculture Department (USDA) showed on Thursday, as New
York futures hovered near two-year highs above 90 cents a lb.
The cuts resulted in net cancellations of some 10,900 bales,
the first time buyers have bought fewer bales than they canceled
since June 2012.
The report led to the benchmark May cotton contract on ICE
Futures U.S. trade to an over one-month low of 89.05
cents a lb post-report and trading down 1.16 cents, or 1.3
percent, at 89.28 cents a lb by 11:26 a.m. EDT (1510 GMT).
Buyers in Thailand, Mexico, Bangladesh, and Indonesia
accounted for the bulk of cancellations. Mexico is the third
largest buyer of U.S. cotton so far this season, behind Turkey
That was the largest number of net cancellations since June
2012, when buyers opted out of at least 602,100 bales, according
to USDA data reviewed by Reuters.
Sales of bales for the 2014/15 crop year picked up,
suggesting some of the bales had been pushed to the new year
that begins on Aug. 1.
The December contract, which represents the 2014/15
crop, traded at around 80 cents a lb in recent sessions. Nearby
prices have been trading at a premium since late 2013 due to
worries over tight supplies in the U.S, the world's top
Front-month prices soared to 97.35 cents a lb in late
March and has hovered at the key level of 90 cents a lb since as
expectations that the strong pace of U.S. export sales will
"Buyers definitely anticipate a fall out in prices. The
price is high in the front, showing there's a short-term supply
squeeze, but long-term, there's going to be plenty around," said
one U.S. broker.
The cancellations will likely stoke merchants' worries after
price gyrations in 2011 spurred widespread contract defaults by
both mills and farmers. Buyers in Bangladesh were among the
While prices have fallen sharply from highs above $2 a lb in
early 2011, volatility has picked up in recent weeks as traders
weigh short-term supply concerns with huge global inventories.
To be sure, there were no net cancellations reported for the
top U.S. destinations of Turkey and China, a relief to traders.
Traders closely watch for signs of demand in China, the
world's top consumer, as Beijing unwinds a stockpiling program
it launched in 2011 that has driven voracious demand for foreign
bales and pegged a floor under world prices.
(Reporting by Chris Prentice; Editing by Sofina Mirza-Reid)