NEW YORK: ICE cotton futures gained on Tuesday, as some concerns emerged that adverse weather in Texas could hamper planting, while the natural fibre also benefited from a dip in the dollar.
Cotton contracts for December rose 2.01 cent, or 2.4%, to 85.33 cents per lb by 12:37 p.m. EDT. It traded within a range of 83.32 and 85.44 cents a lb.
“We saw quite a bit of rain over the weekend but almost to the point that it was too much. ... There was quite a bit of flooding and hale damage to some of the new crop in Texas,” said Bailey Thomen, cotton risk management associate at StoneX Group.
“Any damage or delays to the planting now could give the market some additional support,” Thomen said.
Increased rainfall in the top cotton producing West Texas region that helped farmers plant the crop, have weighed on cotton prices in recent weeks.
While the heavy downpour and hail likely damaged some of the crop, it also likely ended the drought in a lot of other areas, meaning that cotton acreage remains uncertain and a “moving target” in the longer-term, Peter Egli, director of risk management at British merchant Plexus Cotton, said.
“The speculators that remain are probably not going to sell their positions and if demand is decent, we could move higher,” Egli added.
Also, aiding cotton’s rise, the dollar weakened against rival currencies, making greenback denominated cotton cheaper for other currency holders. Market participants now await a weekly crop progress by the US Department of Agriculture due later in the day.
Total futures market volume rose by 6,766 to 28,544 lots. Data showed total open interest fell 21 to 226,493 contracts in the previous session.