New York cotton futures edged higher on Tuesday as renewed concerns about dry weather in Texas, the top-producing US state, offset speculator selling on expectations of excess supplies. The benchmark December cotton contract on ICE Futures US closed up 0.32 cent, or 0.5 percent, at 64.16 cents a lb, ending the day higher for the first time in four sessions.
Prices have been under pressure as speculators have piled into a bearish stance. Expectations have mounted that a bumper 2014/15 crop in the United States, the world's top exporter, would add to huge excess global supplies. But dry weather forecasts have renewed concerns over a multi-year drought in Texas and producer selling has dried up at recent lows, slowing the momentum of the slide.
"It's gotten very, very dry again out in west Texas," said Sharon Johnson, a cotton specialist with KCG Futures in Georgia. The return of rains in the key region earlier in the growing season helped trigger a sell-off that has left the December contract, which represents the first of 2014/15 US cotton, down 24 percent from early May highs near 85 cents a lb.
Benchmark prices have steadied in a narrow trading range above a near five-year low of 62.02 cents per lb struck on August 1 and below the key 65-cent level over the past two weeks. "You have mill buying, but not in great volume, and the speculators continue to sell intermittently," Johnson said. Exchange inventories continued their slide to the lowest levels since late January. They dropped to 88,149 bales on Monday from 90,197 bales previously, the most recent ICE data showed.