NEW YORK: ICE cotton futures eased on Monday, weighed down by the weakness in grains market, although a softer dollar and concerns over the weather in top growing regions kept a floor on the natural fibre’s prices.
Cotton contracts for December fell 0.09 cent, or 0.1%, to 85.09 cents per lb, by 12:33 p.m. EDT (1633 GMT).
“The market is probably falling in sympathy with the grains markets,” Jim Nunn, owner of Tennessee cotton brokerage Nunn Cotton, said, adding some weather issues are providing support at the 83-84 cents level.
Chicago corn and soybean futures fell as US crops benefited from much-needed rains over the weekend while wheat prices also weakened.
Meanwhile, heavy rains over the weekend from Tropical Storm Claudette threatened the natural fibre crop in the US Delta region.
The dollar index slipped from a multimonth peak, making cotton affordable for holders of other currencies.
“There are concerns that remain about the size of the US crop in 2021, with how many acres have been planted and on the flip side demand is still good overseas,” Nunn said.
Market participants are now awaiting a weekly crop progress report by the US Department of Agriculture (USDA) later in the day and the planted acreage report due on June 30 for further clarity on the production outlook.
“How much rain Texas receives from now will be key to its production. ... What remains unchanged, however, is the continued strong pace of cotton demand from China,” OCBC said in a note.
“Exports are likely to end in 2020/21 400k bales more than USDA expects, by our estimates, putting a strain on what looks like already a very tight balance sheet next year.”
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