NEW YORK: U.S. cotton futures tumbled nearly 2 percent on Wednesday, the most in a month, as investors and traders turned cautious ahead of exports data and the first official reading of full supply demand for the 2014/15 season.
Weekly data on net upland sales of all U.S. cotton will be released on Thursday. On Friday, the U.S. Department of Agriculture will issue a monthly report that features its first full forecast for the cotton season that begins on Aug. 1.
"We're worried about the export sales report tomorrow because China is selling stocks," Jack Scoville, vice-president at The Price Futures Group in Chicago, said referring to the possibility of U.S. cancellations from the Chinese sales.
"And then there is the supply demand report. I think speculators are getting out of longs, worrying about a potential bear surprise."
The most-active cotton contract on ICE Futures U.S., the second month July, ended down 1.43 cents, or 1.5 percent, at 92.55 cents a lb after trading in a near 2 cent-wide band. The market's sharpest drop prior to that was on April 7, when it fell 1.6 percent.
Total market open interest rose to 195,428 lots on Tuesday, up from Monday's 193,300, and the highest since Nov. 6, 2013, ICE data showed.
Merchants, analysts and farmers expect U.S. inventories to jump next season as growers boost output and Beijing overhauls the stockpiling program that has driven huge demand for foreign bales.
Even so, traders remain uncertain over whether a multi-year drought in Texas will cause crop damage and hurt output in the United States, the world's top exporter.
Speculators have piled into the cotton market, raising their bets in the most recent reporting week, as dry skies in Texas stoked worries over tight supplies in the world's top exporter.
A weekly U.S. government report released on Monday after the market closed showed U.S. farmers were planting less than in prior years, with 16 percent of acres sown compared with the five-year average of 25 percent.
Comments
Comments are closed.