May 22 (Reuters) - Cotton prices extended losses on Wednesday as China and the United States battled tit-for-tat in their long-drawn trade tiff and as favorable planting weather in parts of Texas promised larger crop harvests.
* Cotton contracts for July settled down 0.57 cent, or 0.85%, at 66.75 cents per lb. It traded within a range of 66.12 and 67.45 cents a lb.
* “The trade talks are not happening and we do not have a trade deal. Secondly, the 2019 crop is going to a very normal historic pace,” said Keith Brown, principal at cotton brokers Keith Brown and Co in Moultrie, Georgia.
* “Last year we had 6 million acres of Texas cotton in drought. But this year the 6 million acres have had good moisture. The crop could be massively larger by the time we reach harvest.” The World Agriculture Supply and Demand Estimates (WASDE) last week predicted cotton production in the United States would climb to 22 million 480-pound bales for 2019/20, but cotton participants are concerned where this extra production will find demand.
* On the trade front, relief over Washington’s temporary relaxation of curbs against China’s Huawei Technologies vanished after reports that the White House is considering further sanctions on Chinese video surveillance firm Hikvision.
* However, U.S. Treasury Secretary Steven Mnuchin said that the next round of U.S. tariffs on China are at least a month away, leaving room for further negotiations between the world’s two largest economies.
* Meanwhile, China’ industry website said that over 10,000 tonnes of cotton was sold at its auction of state reserves on Wednesday, after selling more than 11,000 tonnes on Tuesday.
* “What is significant is that they are having those auctions,” Brown said. “If you are bullish, you’d say they are making room to buy cotton from the United States. On the other hand, they are not buying cotton from us, so they are using their own cotton.”
* Total futures market volume fell by 2,799 to 20,978 lots. Data showed total open interest gained 1,164 to 215,527 contracts in the previous session.
* Certificated cotton stocks <CERT-COT-STX> deliverable as of May 21 totaled 77,278 480-lb bales, up from 73,235 in the previous session.
(Reporting by Karthika Suresh Namboothiri in Bengaluru Editing by Marguerita Choy)
