NEW YORK: ICE cotton futures stabilised on Tuesday near the highest in more than two weeks hit during the previous session, as market participants awaited quarterly crop data from the US Department of Agriculture that was expected to show a drop in plantings of the natural fibre. Cotton contracts for December rose 0.02 cent, or 0.02 %, at 87.45 cents per lb, at 11:56 a.m. EDT (1556 GMT), after hitting their highest since June 11 in the previous session.
"There's the perception that acres are going to be lower in the report tomorrow," and an uptick in the Chicago grains market is also supporting prices, said Rogers Varner, president of Varner Brokerage in Cleveland. Analysts and traders in a Reuters poll estimate cotton plantings for 2021 at 11.856 million acres in US Department of Agriculture's (USDA) June 30 acreage report, down from March's 12 million acres.
A drop in acres used for cotton would indicate a tightening of supply for the natural fibre, and likely add momentum to prices.
"In the planting season, the grain prices were better, and cotton prices did not rally as much, so the US lost some acres as the spring wore on," Varner added.
Chicago Board of Trade grain and soybean futures rose as traders adjusted positions ahead of the report on crop plantings and continued to worry about the risks for unfavourable weather. The dollar gained on Tuesday, making cotton expensive for buyers holding other currencies.
The US Department of Agriculture's (USDA) weekly crop progress report on Monday showed 52% of the crop was in good to excellent condition, identical to a week ago. Total futures market volume fell by 4,444 to 10,510 lots. Data showed total open interest gained 2,444 to 213,527 contracts in the previous session.