NEW YORT: ICE cotton futures were headed for a weekly dip on Friday, as a recent rain spell and forecasts for more showers in West Texas overshadowed an upbeat outlook for exports.

Cotton contracts for July fell 0.41 cent, or 0.5% to 82.20 cents per lb by 1:20 pm EDT (1720 GMT). It traded within a range of 81.93 and 82.91 cents a lb.

While improving weather conditions in the top cotton producing West Texas region were weighing on the market, analysts said the demand outlook for cotton was positive and could still result in a tight market.

“It (the weather) is probably the more important factor (now) ... we’re hanging in here and the news on the horizon appears to be rather bullish, so I suspect we’ll head higher,” said Jack Scoville, vice president at Chicago-based Price Futures Group.

“Demand for US cotton has held up and even with good production prospects around the world, I think we’ll get our share of the business,” potentially helping prices rally, Scoville said.

The US Department of Agriculture (USDA)’s weekly export sales report on Thursday showed net sales for the 2020/2021 marking year were 59% higher than the prior week.

The crop is likely to be lower in Texas, the Delta and Midsouth region and Georgia with cotton loosing some acreage to competing crops like soybeans, wheat, sorghum and peanuts, said Louis Barbera, partner and analyst at VLM Commodities Ltd.

Barbera added that the lower acreage and upbeat demand outlook could lead to limited U.S cotton supplies.

Data showed total futures market volume fell by 7,728 to 15,712 lot and open interest gained 2,605 to 225,657 contracts from the previous session.

Certificated cotton stocks deliverable as of May 27 totalled 146,886 480-lb bales, up from 146,731 in the previous session.