ICE cotton futures fell to more than two-week lows on Friday after the government lowered its US export outlook for the new crop, as a stronger dollar further weighed on the prices of the natural fibre. The December cotton contract on ICE Futures settled down 0.61 cent, or 0.83 percent, at 72.49 cents per lb to mark its biggest percentage fall since end-May. It traded within a range of 72.26 and 73.19 cents a lb.
"The report was bearish ... The projection the USDA made on (US) exports would be bearish. They lowered exports from 14 million to 13.5 million bales so that caused the ending stocks to increase half a million bales. So that is negative," said Keith Brown, principal at cotton broker Keith Brown and Co in Moultrie, Georgia.
Ending stocks in the United States were projected at 5.5 million bales, which would be a nine-year high, the monthly World Agricultural Supply and Demand Estimates (WASDE) report released by the US Department of Agriculture showed. "However, our crop still has some problems and the US has had issues with keeping high quality cotton in stock. We think that the US export projection is likely to move higher as we go forward," said Louis Rose, co-founder and director of research and analytics at Rose Commodity Group.
World ending stocks are projected at 87.7 million bales, the lowest since 2011-12, the report added. "Also the crops in the South East have been getting some decent rains," Brown added. A stronger dollar also pressured the prices of the natural fibre, he said.
The dollar index was up 0.40 percent. Meanwhile, the July cotton contract on ICE Futures US touched a two-month low of 75.55 cents per lb. The contract settled over a percent lower at 75.69 cents per lb. Total futures market volume rose by 6,517 to 38,400 lots. Data showed total open interest fell 298 to 232,940 contracts in the previous session. Certificated cotton stocks deliverable as of June 8 totalled 453,374 480-lb bales, up from 449,299 in the previous session.