New York key cotton contract dips

Spot US cotton futures pushed higher for a fourth straight session on Thursday, as short position holders scrambled to cover ahead of the start of delivery period on Friday. The rest of the board ended lower, falling under the weight of a stronger dollar and disappointing weekly export sales data that saw cancellations in both the old and new crop.
"December cotton is struggling because of the terrible sales today," said Keith Brown of Keith Brown and Co in Moultrie, Georgia. The key December cotton contract on ICE Futures US shed 2.05 cents, or 1.7 percent, to finish at $1.1940 per lb, near the bottom end of its $1.1869 to $1.2302 session range.
Spot July climbed 3.33 cents or 2 percent to end at $1.6455 per lb. The spread between July and December cotton has grown considerably over the past week, growing to its widest level since April, as players still holding short positions in the expiring contract scrambled to cover. "July has a squeeze of sorts about itself," one cotton broker said. Friday marks the first delivery day for the July contract.
Meanwhile, later-dated contracts succumbed to liquidation pressure tied to a stronger dollar and weekly export sales data from the US Agriculture Department, which showed total US cotton sales saw a reduction of 33,100 running bales (RBs, 500-lbs each). Next week, the market will turn its attention to the annual planted acreage report by the USDA showing how much was planted to major row crops in the United States. On the weather front, sweltering summer heat and a persistent lack of rain have deepened an historic drought gripping Texas and surrounding US southern states. The "Drought Monitor" report released Thursday from a consortium of national climate experts said that over the last week, the worst level of drought, called "exceptional drought," expanded to cover more than 70 percent of Texas.
And 91 percent of the Lone Star State suffers from either exceptional drought or the second-worst category, "extreme" drought. Open interest in the cotton market, an indication of investor exposure in fibre contracts, fell to 136,472 lots as of June 22, the lowest level since September 15, 2009, ICE Futures US data showed.