ICE cotton futures fell over 1% on Tuesday, on good crop conditions and planting progress in major growing regions in the United States, while a robust dollar kept the natural fiber close to three-year lows touched last week. The most-active cotton contract on ICE Futures US, the second-month December contract settled down 0.89 cent, or 1.39%, at 63.06 cents per lb.
It traded within a range of 62.84 and 63.95 cents a lb. "The (weather) conditions are very good for growing cotton all across the country," said Rogers Varner, president of Varner Brokerage in Cleveland, Mississippi, adding that prices were also pressured by a strong dollar. The dollar index was up 0.5% on Tuesday on better than expected US retail sales data. A stronger greenback makes commodities priced in dollars, such as cotton, more expensive for holders of other currencies.
Meanwhile, the US Agriculture Department (USDA) released the crop progress data on Monday that showed cotton plant progress at 56%, which was far higher than the progress a year ago at 41%. "The number one issue for cotton is world demand is terrible. It is just a horrible situation - no export demand, we have got a lot of cotton in the world, it is going down pretty hard for weeks now," said John Bondurant, a trader in Memphis, Tennessee.
Lack of domestic demand as well as a long-drawn out trade war between the United States and China has pushed cotton prices down over 14% so far this year. President Donald Trump said on Tuesday the United States still has a long way to go to conclude a trade deal with China but could impose tariffs on an additional $325 billion worth of Chinese goods if it needed to do so. Total futures market volume fell by 1,349 to 16,513 lots. Data showed total open interest fell 108 to 190,313 contracts in the previous session. Certificated cotton stocks deliverable as of July 15 totaled 60,410 480-lb bales, down from 63,125 in the previous session.
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