Cotton Slides to Near-Five-Week Low on Lack of News

Alexandra Wexler

  NEW YORK - Cotton futures fell Wednesday to their lowest settlement since

Sept. 5 as a lack of fresh weather news and government data left the market to

drift lower.

  Traders had worried last week that Tropical Storm Karen would dump rains on

fields in No. 2 cotton-producing state Georgia and damage yields. But cotton

futures tumbled 3.6% Monday after rains in the Southeastern portion of the U.S.

didn't do significant damage to fiber still in the field.

  In addition, since the partial U.S. government shutdown began Oct. 1, the

U.S. Department of Agriculture has not released closely watched reports on U.S.

cotton export sales or the progress and condition of the U.S. crop. A key

monthly supply-and-demand report, which had been scheduled for release Friday,

is also expected to be delayed. Traders say the market is ripe for a squeeze in

the December contract because of the lack of government oversight.

  Open interest--or the number of outstanding positions--in the December cotton

contract has dropped by 4% this week as prices have hit near five-week lows.

Cotton for delivery in December on the ICE Futures U.S. exchange ended 0.6%

lower at 83.20 cents a pound on Wednesday.

  "It could make the (exchange) the cheapest place to buy cotton," said Chris

Kramedjian, a risk-management consultant at brokerage INTL FCStone. "Without

the government oversight, it's easier to build that position."

  Cocoa for December delivery eased from a 23-month high to settle at $2,703 a

ton, down 0.6% on the day.

  Prices have surged as rains in West Africa, a region that produces about 70%

of the world's cocoa, delayed the shipment of cocoa beans to ports, traders and

analysts said. And that rain isn't expected to reverse the effects of dry

weather in July and August, when the main crop was developing, market

participants added. As a result, the beans being harvested may be of lower

quality or fewer in quantity.

   Raw sugar for March delivery settled 0.2% lower at 18.59 cents a pound, down

from a near-seven-month high settlement on Tuesday as the market consolidated.

  Concerns about supplies in Brazil, the top producer of the sweetener, have

been buoying the market as heavy rains disrupt harvesting during the tail-end

of the sugar-cane crop.

  Arabica coffee for December delivery ticked 0.2% higher to $1.1525 a pound,

while orange juice for delivery in November closed 0.5% lower at $1.2850 a

pound in thin trade.