NEW YORK: ICE cotton futures weakened on Tuesday, after a federal weekly report indicated improvement in crop conditions, boosting concerns of increased supplies in a tight market.
Cotton contracts for December fell 0.09 cent, or 0.1%, to 93.27 cents per lb, by 11:49 a.m. EDT (1549 GMT). Earlier, the contract dropped as much as 1.6% to 91.91 cents per lb.
"The crop is coming along very nicely, recent storms didn't do any damage. Supplies in the US are incredibly tight and it could make getting cotton out to end-users in October and November very complex," said Jordan Lea, senior trader at DECA Global.
Macro supply worries due to logistical and freighting issues, could become a bullish factor, something market participants are watching and trying to manage, Lea said.
The US Department of Agriculture's weekly crop progress report released on Monday showed 71% of the US crop was in good-to-excellent condition, up from 67% a week ago, and from 46% a year ago.
Despite recent dips, prices will likely rise and producers will start to sell, and given that the crop is late and there are question marks around the weather, no one is very worried about the market going down a lot, Lea added.
The dollar eased, making cotton cheaper for buyers holding other currencies, likely helping demand, and thereby limiting losses. Total futures market volume fell by 6,447 to 12,795 lots. Data showed total open interest gained 2,203 to 269,460 contracts in the previous session.
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