PCG EMAIL SERVICES: REUTERS.COM - Cotton falls 2 pct as U.S. government shutdown offsets rain fear
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Wed Oct 2 08:32:43 CDT 2013
REUTERS.COM - Cotton falls 2 pct as U.S. government shutdown offsets rain fear
Wed Oct 2, 2013 12:45am IST
By Marina Lopes
NEW YORK, Oct 1 (Reuters) - New York cotton prices tumbled as much as 2 percent on Tuesday, ending a five-session winning streak, as the U.S. government shutdown spooked investors and overshadowed fears about delays and damage to the U.S. crop from stormy weather.
The most-active December cotton contract on ICE Futures U.S. settled down 0.61 cent, or 0.7 percent, at 86.6 cents a lb.
Prices recovered from an intraday low of 85.48 cents as the pace of selling slowed and the market stabilized after the initial shock.
Fiber's performance was slightly worse than the broader commodity market, with the Thomson Reuters-Jefferies CRB index , a closely watched indicator for commodities, down 0.5 percent on the day.
"That is weighing on cotton in particular. Near-term concerns are keeping funds on the sidelines. It is definitely impacting prices," said Sterling Smith, a futures specialist with Citigroup in Chicago.
Traders worry that they will miss critical agricultural statistics as federal agencies closed indefinitely.
"If it ends up pushing the reports back, it will affect market volume and it could affect prices," said Smith.
The shutdown coincided with a seven-day holiday in China, aggravating a decline in market activity.
Even so, traders continue to fret about a potential supply tightness if crops in Texas, the country's biggest producing state, are damaged by approaching rainfall.
A USDA crop progress report published on Monday showed further delays in crop progress, with only 53 percent of bolls open in Texas, well below the key cotton state's four-year average.
But the delay could be a blessing in disguise for investors worried about storms brewing in the Gulf of Mexico which threatened open ball cotton crops and spurred a round of speculative buying earlier this week.
"If we do see rain impact the cotton bolls, that will be a problem. The damage is extensive enough that it would push prices up," Smith said.
(Editing by Josephine Mason and James Dalgleish)
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