NEW YORK: ICE cotton futures climbed to a three-week high on Tuesday, as worries about the quality of natural fiber due to hot temperatures in Texas were underpinned by a federal report. Cotton contracts for December rose 0.22 cent, or 0.3%, to 64.09 cents per lb at 2:10 p.m. EDT (1810 GMT).
Prices earlier rose to their highest level since July 10 at 64.28. "Yesterday's crop progress report showed that the condition in Texas has gone down quite a bit and that could be a factor playing in to it," said Bailey Thomen, cotton risk management associate with StoneX Group.
"It's really hot and dry in Texas so we are seeing a decrease in quality." The United States Department of Agriculture's weekly crop progress report showed 45% of the crop in good/excellent condition, compared with 54% a year ago. Hot temperatures returned in West Texas on Tuesday with most of the region above 100 degrees Fahrenheit, according to a National Weather Service bulletin.
Meanwhile, lackluster demand due to the pandemic has led to a 9% fall in cotton prices so far this year, with economies reopening and a string of stimulus packages from major central banks cushioning the hit to some extent. A weakening dollar and modest uptick in business activities have helped cotton recover a bit, Louis Rose, director of research and analytics at Tennessee-based Rose Commodity Group, said in a note.
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