NEW YORK: ICE cotton futures rose to their highest in nearly a week on Tuesday, propelled by fears of damage to the natural fibre crop in the delta region due to heavy rains.
Cotton contracts for December rose 0.70 cent, or 0.8%, at 85.89 cents per lb, by 1:07 p.m. EDT (1707 GMT). Prices earlier rose to their highest since June 16 at 86.14 cents.
“The verdict on the weather is still not out... We’ve had a lot of excess rain in the delta in the last 48 hours from Tropical Storm Claudette and remnants of that storm are still coming up,” said Keith Brown, principal at cotton brokers Keith Brown in Georgia.
The one-to-five day forecast calls for heavy rains in the delta throughout this week, which can drown the crop and make it difficult to plant more, Brown said.
Over the weekend, Claudette produced heavy rainfall and flash floods in much of the southeastern United States.
Further supporting cotton, the dollar index inched lower, making cotton affordable for holders of other currencies.
The US Department of Agriculture’s (USDA) weekly crop progress report showed 52% of the crop was in good to excellent condition, versus 45% a week ago, while 96% was planted versus 90% the week before.
“There is certainly a strong argument to be made for a rally to or through the 90-cent level before the June 30 (acreage) report, cotton has the lowest open interest in months, and our young cotton crop is in very uncertain condition,” Louis Rose, director of research and analytics at Tennessee-based Rose Commodity Group said in a note.
Meanwhile, speculators raised net long positions in cotton futures by 1,412 contracts to 49,712 in week to June 15, data showed on Monday.
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