ICE cotton futures fell more than 1% on Wednesday as farmers rushed to sell excess stocks in a bid to lock in prices given the uncertainty over future demand, especially from China.
Cotton contracts for July fell 0.87 cent, or 1.5%, at 58.33 cents per lb by 02:14 p.m. (1814 GMT).
“Farmers are trying to get rid of the unsold stock when the prices are still good," said Keith Brown, principal at cotton brokers Keith Brown and Co in Moultrie, Georgia.
“Cotton right now is under the cost of production," Brown said.
The coronavirus had brought economies across the world to a standstill, hammering demand for apparel and in turn, cotton, causing unsold stocks of the natural fiber to pile up and driving an about 15% slide in prices thus far this year.
Meanwhile, an uptick in trade tensions between the United States and China also dampened sentiment and cast doubts over future Chinese demand for cotton from the United States.
US is the biggest exporter of cotton, while China its largest consumer.
Brown said, however, that Chinese demand may stall but with US cotton desirable and after China's economy reignites, “they will need a lot of cotton to run their production."
Markets are watching out for the US Department of Agriculture's weekly export sales data due on Thursday, for confirmation on Chinese purchases.
Total futures market volume fell by 5,307 to 21,380 lots. Data showed total open interest gained 1,193 to 177,692 contracts in the previous session. Certificated cotton stocks deliverable as of May 19 totaled 5,830 480-lb bales, up from 4,646 in the previous session.-Reuters