NEW YORK: ICE cotton futures edged down on Wednesday as investors took profits after the recent rally and the ongoing harvest in major crop producing regions weighed on the natural fibre.
Cotton contract for December fell 0.20 cent, or 0.3%, to 68.63 cents per lb, at 1:19 pm EDT (1719 GMT). It traded within a range of 68.55 and 69.39 cents a lb.
The December contract rose to a near eight-month high of 69.47 cents per lb earlier this week.
“Cotton is too high for the amount of supply in the US and the world,” said Louis Rose, director of research and analytics at Tennessee-based Rose Commodity Group.
“There is probably a hard cap on nearby futures near 70 cents per lb, with a lot of willingness to be short at this level,” Rose said, adding the harvest season across the northern hemisphere and particularly the United States is adding pressure.
The US Department of Agriculture’s weekly crop progress data on Tuesday showed that 26% of cotton was harvested in the United States as of the week ended Oct. 11, up from 17% in the preceding week.
However, the report also showed that only 40% of cotton was in good/excellent condition, unchanged from the preceding week.
“The fact that we did go to 69.39 and couldn’t take out that high of 69.45 was a little discouraging so, we are seeing some light profit taking but volume today is fairly muted,” said Keith Brown, principal at cotton brokers Keith Brown and Co in Georgia.
The market is still trying to assess the yield loss from Hurricane Delta, he added.
Total futures market volume fell by 6,770 to 15,635 lots.
Certificated cotton stocks deliverable as of Oct. 13 totalled 24,232 480-lb bales, up from 23,836 in the previous session.—Reuters