NEW YORK: ICE cotton futures rose on Tuesday, rebounding from a sharp plunge in the previous session, buoyed by technical support and an outlook for dry weather in Texas as focus turns to a month-end acreage report.

Cotton contracts for December rose 0.40 cent, or 0.5%, at 86.53 cents per lb, by 12:56 p.m. EDT (1656 GMT). Prices had dropped to its lowest since June 1 at 83.92 cents on Monday.

Cotton could be finding support from forecasts pointing to Texas weather running dry for about 10 days, said Rogers Varner, president of Varner Brokerage in Cleveland. Texas has been hit by a heat wave, with forecasts of over 90 degrees Fahrenheit (32°C).

Market participants now await the June 30th acreage report for clues on the production estimate for the US 2021/22 crop.

“My guess is that the acres are going to be about three quarter of a million less than the March intentions,” Varner added. In March, the US Department of Agriculture estimated all cotton planted area for 2021 at 12.0 million acres. Prices are also receiving support at the 100-day moving average level, said Jon Marcus, president of Lakefront Futures and Options brokerage in Chicago.

The US Department of Agriculture’s (USDA) weekly crop progress report showed 90% of the crop was planted versus 71% the week before, while 45% was in good to excellent condition, down from 46% a week ago.

“US cotton exports are expected to retain its steady pace through next season but that is offset by higher production,” OCBC bank said in a note. “The planting pace, soil moisture and even crop conditions are all hovering around the 5Y average - meaning any drive higher in prices would have to come from increased demand, which we see as unlikely given the already robust pace.”—Reuters