June 19, 2018 / 8:22 PM / 4 months ago

UPDATE 3-ICE cotton futures tumble as U.S.-China trade spat triggers selloff

 (Updates with closing price, adds quotes)
    June 19 (Reuters) - ICE cotton futures plunged 4.5 percent
on Tuesday, sliding to their lowest in nearly four weeks, as
concerns about an escalating trade conflict between the biggest
exporter United States and top consumer China sparked a
sell-off.
    The most active cotton contract on ICE Futures U.S., the
third-month December contract              , settled down 3.95
cents, or 4.50 percent, at 83.82 cents per lb after hitting
exchange-imposed limits for losses on the day. It traded within
a range of between 83.77 and 88.3 cents a lb.    
    Speculators left the market en masse because of the
imposition of tariffs by China, said Louis Rose, director of
research and analytics at Tennessee-based Rose Commodity.
    "Generally, in trade situations those type of fears will go
away. They have got to cause some spec exodus. But I think we
will probably see demand supporting cotton above 80 cents," Rose
added. 
    Earlier in the session, the contract traded limit down,
falling to 83.77 cents per lb, its lowest since May 24. The
third-month contract        also marked its biggest one-day
percentage fall since March 2014.
    "Barriers to trade are hugely bearish for this (cotton)
market," said Rabobank commodity analyst Charles Clack, adding
that the trade dispute will affect China's potential to buy more
cotton.
    "Demand has been particularly strong over the last year ...
and the United States looks to be that nation which is going to
be the biggest beneficiary of additional demand. Now these
tariffs really put that into question," Clack said.
    Cotton futures        have dropped over 11 percent since
hitting a more than six-year high of 94.82 cents a lb on June 8.
   
    "We've just seen a wholesale dumping of futures here the
last couple of days in grain and cotton," said Sid Love,
commodity trading advisor at Kansas-based Sid Love Consulting. 
    "I wonder if today just wasn't a blowout type of day and
there's more downside risk in the charts because cotton has run
up so well in the last few months. But we're just having a sort
of a national down day. Almost every commodity is in the tank."
    ICE Futures U.S. on Tuesday revised its daily trading limit
for all cotton no. 2 futures contract delivery months to 5 cents
per pound above and below the prior day settlement price
effective with start of trading on Wednesday.             
    Total futures market volume rose by 24,832 to 69,943 lots.
Data showed total open interest fell 6,770 to 284,313 contracts
in the previous session.

 (Reporting by Sumita Layek and Vijaykumar Vedala in Bengaluru;
Editing by Jeffrey Benkoe and Sandra Maler)
  
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