Forexpros – Cotton prices traded in a tight range on Tuesday, swinging between small gains and losses as market players digested a report from the International Cotton Advisory Committee forecasting a slowdown in global cotton consumption as well as a decline in global production of the fiber.
On the ICE Futures U.S. Exchange, cotton futures for May delivery traded at USD0.9320 a pound during European afternoon trade, easing up 0.1%.
The May contract traded in a range between USD0.9294, the daily low and a session high of USD0.9349 a pound.
The International Cotton Advisory Committee said in a report Monday that global cotton demand will fall to 23.96 million metric tons in the upcoming 2012-13 marketing year, which begins in August 2012 and ends in July 2013.
The number was almost 1.5% lower than the 24.28 million metric tons forecast by the ICAC last month.
Global use was projected at 23.138 million tons in the year ending July 31.
World production of the fiber was expected to total 25.47 million tons in the 12 months starting August 1, down from 25.73 million estimated last month. Output was projected to total 26.964 million in the current marketing season.
The ICAC added that global cotton trade and prices are affected to a large extent by government policies in China and to a lesser extent by policies in India.
Cotton traders have been focusing on prospects for increased Chinese demand in recent months after the country started a cotton stockpile last September to protect domestic farmers’ interests.
However, the stockpiling program came to an end on Saturday, March 31.
Meanwhile, India, the world’s second largest producer and shipper of the fiber, imposed a sudden ban on cotton exports in early March, only to be partially lifted less than a week later.
Cotton traders continued to asses last week’s Prospective Plantings report from the U.S. Department of Agriculture, showing that U.S. farmers are expected to plant 13.155 million acres with cotton this year, down 11% from last year but above market expectations for 12.85 million acres.
In early February, the National Cotton Council, an industry group, had pegged U.S. 2012 cotton sowings at 13.63 million acres, down 7.4% from 2011 cotton plantings of 14.72 million acres.
Some market analysts doubted the USDA report and expected the data to be subject to downward revisions in the future as the survey was done on March 1, with spring still to unfold.
Other market participants speculated that cotton plantings were already on the decline, as cotton producers shifted some intended acres to corn and soybeans to take advantage of higher prices.
In Texas, the largest cotton-growing state in the U.S., farmers planted 6.813 million acres, down from 7.570 million last year, the USDA said.
Georgia, the second-largest grower, will plant about 1.4 million acres, down from 1.6 million in 2011.
The USDA’s annual planted acreage report is released June 30.
The U.S. is the world’s biggest exporter of cotton and the third largest producer of the fiber, trailing only China and India.
Elsewhere, on the ICE Futures Exchange, coffee futures for May delivery dipped 0.15% to trade at USD1.8528 a pound, while sugar futures for May delivery eased down 0.15% to trade at USD0.2452 a pound.
Forexpros
