ICE cotton futures fell on Tuesday on worries about an ongoing trade dispute between the United States and China - the world's biggest cotton exporter and top consumer, respectively, and increased rain in major producing region West Texas. The most active cotton contract on ICE Futures US, the third-month December contract, settled down 0.41 cent, or 0.48 percent, at 84.51 cents per lb. It traded within a range of 84.4 and 85.28 cents a lb.
"There is some indication that the tariffs issue may be decided by July 6 and the market is nervous over anticipating what tariffs if any would be applied to cotton," said Rogers Varner, president of Varner Brokerage in Cleveland, Mississippi. The third month contract fell about 5 percent last week in its biggest weekly decline since mid-September as trade tensions escalated between United States and China.
Market participants are keeping a close watch on rain in Texas, the major cotton-growing region in the United States. Recent good weather and softening of demand were affecting the market, Varner said, adding "weather is a whole lot better. West Texas did get enough rain for emergents but the area is still in drought. The Rio Grande Valley is no longer in drought so production prospects look better."
The market is also awaiting the US Department of Agriculture's (USDA) annual crop acreage report due on Friday. A Reuters poll last week showed US cotton acreage was seen at 13.781 million acres for the 2018/19 crop. "Rest of the week (market) will probably be sideways waiting for the acreage report on Friday," Varner said.
Total futures market volume fell by 2,819 to 13,677 lots. Data showed total open interest fell 461 to 258,821 contracts in the previous session. Certificated cotton stocks deliverable as of June 25 totalled 88,762 480-lb bales, up from 86,072 in the previous session.
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