Despite signs that Chinese demand for imported cotton will continue to grow, cotton futures traders backed away from the record prices being set by the fiber.
On the IntercontinentalExchange, No. 2 cotton futures for March 2011 delivery slid 5.36 percent, or 6 cents – the exchange-imposed limit – to 111.79 cents per pound.
According to Peter Egli, risk manager at the major cotton trading house Plexus, the retreat in futures prices isn't that unusual. "We shouldn’t be too surprised, he told the Financial Times. "A parabolic move up always ends in a parabolic move down. It's just a question of how far down."
Cotton has been one of the best-performing commodities in the Thomson Reuters/Jefferies CRB index, in large part because of surging demand from China. According to the U.S. Department of Agriculture, China will import 15 million bales of the fiber next year to July, a jump of 4 million from the previous year. However, there's been a recent slowdown – cotton imports of 96,000 tons in October were 20 percent lower than the year prior.
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