Cotton hits near two-week low in cautious trading

ICE cotton futures edged lower on Tuesday to hit a near two-week low as traders treaded cautiously following the bearish supply-and-demand report released by the US Department of Agriculture on Thursday. The March cotton contract on ICE Futures US hit a session low of 71.81 cents per lb., the lowest since January 4.
"The market is still suffering from the US government's world agriculture supply and demand (WASDE) report," said Keith Brown, principal at cotton brokers Keith Brown and Co in Moultrie, Georgia.
Global and US inventories were seen higher than had been forecast in December, while consumption was reduced for India, Mexico and Turkey, mostly offset by an increase for China, according to the monthly report.
Another concern weighing on the natural fibre market was the potential impact of President-elect Donald Trump's views on trade relations with China, Brown said.
Speaking at the World Economic Forum in Davos on Tuesday, Chinese President Xi Jinping cautioned other countries against blindly pursuing their national interests, in an apparent reference to the "America first" policies of Donald Trump.
An early morning cotton rally turned into small losses on Tuesday as grains drew away fund interest, said Gabriel Crivorot, analyst at Societe Generale in New York.
US soybean futures rose more than 2 percent on Tuesday, touching a six-month high on worries about excessive rains in Argentina crimping production prospects, analysts said. Corn and wheat followed the firm trend, drawing additional support from a setback in the dollar.
The March cotton contract on ICE Futures US settled down 0.16 cent, or 0.22 percent, at 72.11 cents per lb. It traded within a range of 71.81, the lowest since January 4, and 72.87 cents a lb. Total futures market volume rose by 2,558 to 25,155 lots. Data showed total open interest fell 7 to 262,316 contracts in the previous session.
Burkina Faso estimated its production of raw cotton would rise to 750,000 tonnes in 2016/2017 compared with around 600,000 tonnes in the previous harvest as favourable rainfall boosts output, the country's agriculture minister said on Monday. Ivory Coast exported 329,586 tonnes of cotton from January through November 2016, down more than 17 percent from the same period in the previous year, provisional port data showed on Monday.