ICE cotton futures rose for a second straight session on Monday to a seven-week high on forecasts for strong US crop demand before turning lower before the market closed. The December cotton contract on ICE Futures hit 70.94 cents a lb earlier in the session before settling down 0.07 cent, or 0.10 percent, at 70.55 cents per lb. Rain in Texas has also slightly lowered expectations for US crop production.
"Mother Nature came back into play and instead of boosting West Texas (top cotton producing state in the US) production with adequate moisture, she likely washed away some acreage and played havoc with plant growth, regrowth and in many fields brought about a delayed maturity schedule," said O.A. Cleveland, consulting economist at Cotton Experts.
Prices of the natural fiber were also supported by higher demand for the US crop. US cotton exports for 2016/17 marketing year exceeded the USDA's 14.5 million bale export target on July 27 and, potentially, could reach as high as 14.9 million bales, said Louis Rose, co-founder and director of research and analytics at Rose Commodity Group.
"Sales may continue to be strong over the coming weeks. With plentiful rains across the cotton belt and harvest season approaching, merchants may become more willing to commit to forward sales," Rose said. The US Department of Agriculture's World Agricultural Supply and Demand Estimates (WASDE) report and the weekly US export sales data will be released on Thursday. Total futures market volume rose by 755 to 19,022 lots. Data showed total open interest fell 97 to 216,739 contracts in the previous session.
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