ICE cotton futures edged higher on Tuesday as concerns of potential crop damage due to storm Harvey lifted the prices of the natural fiber to near three-week highs. Cotton contracts for December settled up 0.15 cent, or 0.21 percent, at 69.98 cents per lb. It traded within a range of 69.33 and 70.46 cents a lb, its highest since Aug. 10.
"There are no official numbers yet, however, obviously there will be some damage, which is why the prices have been rising," said Gabriel Crivorot, analyst at Societe Generale in New York. The December contract rose for the second straight session on Tuesday after gaining about 2.5 percent in the previous session.
"For Texas (top cotton producing state in the US) alone, a rough estimate of damage may be about 400,000 to 500,000 bales which could pull ending stocks down to 5.3-5.4 million bales as compared with 2.8 million for this year," said Keith Brown, principal at cotton broker Keith Brown and Co in Moultrie, Georgia.
Tropical Storm Harvey continues to dump catastrophic rains over southeastern Texas and southwestern Louisiana, the US National Hurricane Center (NHC) said in its latest advisory. Harvey is now located about 80 miles (130 km) south-southwest of Port Arthur, Texas with maximum sustained winds of 45 miles per hour (75 km per hour), the NHC added.
"Flooding is expected to get worser in the next few days because it is still raining... so the crop conditions report next week could show that there was a greater damage than people would have thought and that could have a bullish effect," Crivorot said.
The US Department of Agriculture's weekly crop progress report on Monday showed 65 percent of the crop was in good or excellent condition against 63 percent a week ago. "I don't think that has reflected the damage from the hurricane yet," Crivorot added. Total futures market volume rose by 2,215 to 23,752 lots. Data showed total open interest fell 1,601 to 224,941 contracts in the previous session.