Forexpros – Cotton futures regained strength on Tuesday, pulling away from an almost seven-week low as concerns over deteriorating U.S. crop conditions and ongoing fears over a disruption to supplies in Pakistan drove prices higher.
On the ICE Futures U.S. Exchange, cotton futures for December delivery traded at USD1.0133 a pound during European morning trade, jumping 1.7%.
It earlier rose as much as 1.78% to trade at a daily high of USD1.0139 a pound.
The U.S. Department of Agriculture said in its weekly crop progress report published after markets closed Monday that nearly 44% of U.S. cotton crops were rated in ‘poor’ to ‘very poor’ condition as of September 25, compared to only 14% in the same week a year earlier.
Approximately 29% of the cotton crop was in ‘good’ to ‘excellent’ condition as of last week, compared to 55% in the same period last year.
In Texas, the largest cotton-growing state in the U.S., nearly 62% of cotton crops were rated ‘poor’ to ‘very poor’, while zero were in ‘excellent’ condition, as the state continued to suffer from dry weather conditions.
The U.S. is the world’s third largest cotton producer and the biggest exporter of the fiber.
In Pakistan, the world’s fourth largest cotton grower, nearly 73% of the nation’s cotton crop, or nearly 2 million bales were destroyed by the heavy monsoon rains that began in mid-August.
The news raised speculation that Pakistan would have to import more cotton, boosting future demand expectations for U.S. supplies.
Some mild bargain buying also lent support, after cotton prices fell to a seven-week low of USD0.9905 a pound on September 23.
Swiss lender Credit Suisse said in a report on Monday that the downside to cotton prices is “limited”, citing “low global inventories, the prospect of another La Nina threatening farmers with further weather setbacks, and the likelihood of emerging markets continuing to grow, even if Western economies falter.”
Elsewhere, on the Chicago Mercantile Exchange, wheat for December delivery jumped 1.78% to trade at USD6.5975 a bushel, corn for December delivery rallied 1.83% to trade at USD6.5988 a bushel, while soybeans for November delivery gained 1.01% to trade at USD12.7238 a bushel.
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