Cotton futures dropped in New York on speculation that textile makers and spinning mills will balk at the highest price in 10 months.
Cotton climbed 26 percent this year through yesterday as declines in global production outpaced slowing demand. Today the price tumbled as much as 6.9 percent from yesterday s high.
Futures went beyond physical demand, Andy Ryan, a risk- management consultant for broker FCStone Group Inc., said by telephone from Nashville, Tennessee. We re now pulling back to that level. There s also some follow-through selling by speculators.
Cotton futures for December delivery dropped 0.76 cent, or 1.2 percent, to 61.19 cents a pound on ICE Futures U.S. in New York. Earlier, the price touched 60.49 cents, the lowest for a most-active contract since July 10.
Yesterday, cotton fell as much as 3 cents, the maximum change allowed by the exchange, after reaching 64.98 cents, the highest since Sept. 12.
The slump may not last because Chinese demand is going to come into the market very soon, and that may send prices to 65 cents in a few weeks, Ryan said. Cotton may climb to 75 cents in six to 12 months as supplies tighten, he said.
