New York cotton settles higher

US cotton futures settled higher on Tuesday on commercial and investor buying, with spot July boosted by the perception there will be a receiver for the contract when it goes into delivery this month, analysts said. The key December cotton contract on ICE Futures US rose 0.20 cent to finish at $1.3178 per lb, dealing from $1.2852 to $1.3208.
The spot July contract climbed 4.59 cents or by 3.0 percent to settle at $1.5554 per lb. Total volume traded Tuesday reached more than 18,300 lots at 3:20 pm EDT (1920 GMT), over 10 percent above the 30-day norm, Thomson Reuters preliminary data showed.
Technical liquidation depressed the key December contract early in the session, but the market rebounded off its lows and the poor condition of the US cotton crop, especially in the key growing areas of Texas and Georgia, buoyed fibre contracts.
The US Agriculture Department's weekly crop progress report late on Monday showed that Texas, the top cotton growing state in the country, reported that 44 percent of its cotton was in poor to very poor condition. Georgia, the second biggest cotton growing state, showed 46 percent of its crop in poor to very poor shape. Some 34 percent, or one-third of the US cotton crop, was in poor to very poor condition, the USDA said, compared to 4 percent in poor shape at this time last year.
"The poor crop ratings certainly underscored the problems we got," said Mike Stevens, an independent cotton analyst in Louisiana. Texas is dealing with one of its worst droughts in a century and a similar dry spell has hit areas of southern Georgia. Texas is due for more dry and hot weather through Saturday, forecaster Telvent DTN reported. The July contract got a boost from commercial short-covering as players said a major cotton merchant will likely be the main receiver when the contract goes into delivery next week. Tight deliverable supplies for the July contract has also combined with the covering to boost the spot month, the dealers said.