ICE cotton advanced on Wednesday for a third straight session, bucking a broader commodities sell-off as trade buying and mill fixations lifted prices from a one-week low. The most-active May cotton contract on ICE Futures US edged up 0.55 cent, or 0.6 percent, to settle at 92.20 cents a lb, reversing earlier losses. Fibre eked out a gain despite worries over demand in China, the world's largest cotton buyer.
Concerns over growth in China, the world's No 2 economy and biggest buyer of many raw materials, weighed on equities and commodities markets. Energy and soft commodities markets sank, pressuring the bellwether Thomson Reuters/Core Commodity CRB. Traders covered short positions and mills spied an opportunity to set prices on previously-booked sales during the day's dip to a one-week low of 90.44 cents a lb. "We saw big volumes today. Cotton is still in an uptrend. There may have been some fixations and merchants covering shorts," said Jobe Moss, a broker with MCM Inc in Lubbock, Texas.
Traders were looking ahead to a weekly US government export report due on Thursday to see if high prices have damped demand for fibre in the world's top exporter. Despite expectations for record world inventories by the end of July, tight nearby supplies in the US have underpinned prices in the 2013/14 crop year that began August 1. Even so, exchange stocks ticked up to nearly 260,500 bales on Tuesday, the most since July, according to the most recent exchange data compiled by Reuters. Brazil's government crop supply agency Conab on Wednesday left its forecast for the 2013/14 cotton lint crop unchanged at 1.64 million tonnes, up from 1.3 million tonnes a year earlier.