NEW YORK: ICE cotton futures edged lower on Monday on forecasts for some rain in key producing regions, but losses were capped by a retreat in the dollar and strong performances from core grains markets.
Cotton contracts for July were down 0.34 cent, or 0.4%, to 87.74 cents per lb by 12:29 p.m. EDT (1629 GMT).
“West Texas had some rain end of the week and there’s still some in the forecast today, but it looks like it’s going to turn dry,” said Jim Nunn, owner of Tennessee cotton brokerage Nunn Cotton.
“The direction of rainfall in West Texas will be the major force” behind price moves in the near term, Nunn said, adding prices will remain volatile in line with changing forecasts.
Over the past two weeks, the dry weather in the key growing region of West Texas has intermittently lifted prices of cotton contracts, but late last week the natural fibre slipped as much as 3.9% on some rainfall.
However, a weaker dollar and a sustained upward move in important grains limited losses in the natural fibre.
Chicago corn futures rose on Monday, building on strength seen last week to hit their highest since March 2013 as dry weather in Brazil raised concerns about global supplies.
In areas like Tennessee, cotton is now a significant third to corn and soybeans in terms of profits, and could lose some acres to them moving ahead during May, which is the optimum planting time in the Delta, if the natural fibre does not rally or if those grains continue to gain, Nunn added.