Cotton slips to near seven-week low on US-China deal concerns, Texas weather

ICE cotton futures fell to near a seven-week low on Wednesday, weighed down by uncertainty about US-China trade talks, while favourable planting conditions for the natural fibre in major producer Texas pressured prices further. The most-active cotton contract on ICE Futures US July fell for the fourth straight session and settled down 0.07 cent, or 0.09 percent, at 76.71 cents per lb. It traded within a range of 75.65 and 76.87 cents a lb.
The second-month contract fell to its lowest level since March 15 at 75.65 per cents. "The speculators continue to liquidate and I think the fundamental news behind that is several of the Trump administration officials came out and made statements which could imply there may not be a trade deal," said Keith Brown, principal at cotton brokers Keith Brown and Co in Moultrie, Georgia.
"So one wonders if they are preparing the markets for a walk away." United States and China held "productive" trade talks in Beijing on Wednesday and will continue discussions in Washington next week, US Treasury Secretary Steven Mnuchin said, as the world's two largest economies look for ways to end their bruising trade war.
But US officials say privately that an enforcement mechanism for a deal and timelines for lifting tariffs are sticking points. "West Texas in enjoying great field conditions and that is weighing on prices as well. ... Over time we may come up with a larger crop and December cotton could trade below 70 cents" Brown added.
Meanwhile, investors will look out for the US Department of Agriculture's weekly export sales report to be released on Thursday. Total futures market volume rose by 13,504 to 35,252 lots. Data showed total open interest gained 1,405 to 212,357 contracts in the previous session.
Certificated cotton stocks deliverable as of April 25 totalled 64,241 480-lb bales, up from 62,657 in the previous session.