ICE cotton futures dropped 3% on Tuesday, close to a two-week low, as investors sought details about China buying more US agricultural goods after the initial trade deal between the two countries last week. Cotton contracts for March fell 1.67 cents, or 2.34%, at 69.58 cents per lb by 01:00 p.m. EST (1800 GMT).
It fell to 69.12 cents earlier in the session, the level last seen on Jan. 8.
“Prices are down because they (traders) are factoring in the fact that China has not bought any cotton or soybeans over the weekend," said Jack Scoville, vice president at Chicago-based Price Futures Group.
“We are awaiting on the news. Now that US and China have made the commitment they need to actually buy it but they have not bought anything yet. That's kind of negative."
China committed to buy $40 billion in US agricultural products annually over the next two years under the Phase 1 trade deal signed last week following a 18-month prolonged trade war between the world's biggest economies. US corn and soybean futures weakened as traders awaited proof of new Chinese buying.
“While the current January low at 68.50 cents and the mid-December high at 67.80 cents underpin on a daily chart closing basis, we will retain a medium-term bullish view on cotton," Commerzbank analysts wrote in a note.
Meanwhile, cotton speculators raised their net long position by 9,904 contracts to 18,019, data from the US Commodity Futures Trading Commission showed.
Total futures market volume rose by 5,932 to 37,195 lots. Data showed total open interest fell 190 to 253,737 contracts in the previous session.
Certificated cotton stocks deliverable as of Jan. 20 totaled 6,792 480-lb bales, unchanged from 6,792 in the previous session.