NEW YORK: ICE cotton futures edged up from an over one-month trough on Monday, with a weaker dollar offsetting continued pressure from forecasts for rain in West Texas this week.
Cotton contracts for July rose 0.08 cent, or 0.10% to 82.51 cents per lb by 12:41 p.m. EDT, but held in a tight range of 82-83.57 cents a lb.
Recent rains in the top US cotton producing region West Texas have provided a boost to the crop, prompting the natural fiber to shed over 9% from an over 2-month peak scaled earlier this month.
“This weekend’s rain should get them (West Texas) started with planting and that means that the USDA’s crop estimate is now more realistic than maybe a week ago,” said Peter Egli, director of risk management at British merchant Plexus Cotton, adding that a weaker dollar provided some support for prices.
The US Department of Agriculture (USDA), in its May World Agricultural Supply and Demand Estimates (WASDE) report last week projected a 2.4 million bale increase to US production in the 2021/22 marketing year.
But, “the problem is we didn’t get a lot of subsoil moisture and we have top soil moisture now, so that means there’s a requirement for (more) frequent rain to keep the planting going,” Egli added.
Helping cotton rise, the dollar weakened against a basket of currencies, making greenback denominated U.S cotton more expensive for buyers in other currencies.
Speculators cut net long positions in cotton futures by 1,841 contracts in to 56,891 in the week to May 11, data from the US Commodity Futures Trading Commission showed on Friday.
Market participants now await a weekly crop progress report from the USDA due later in the day.—Reuters