NEW YORK: ICE cotton futures rose to a four-month high on Monday on continued forecasts for dry weather in Texas, the largest cotton-producing US state, as investors await a weekly federal planting report due later in the day.
The December contract, rose 0.43 cent, or 0.7%, at 63.38 cents per lb as of 12:21 p.m. EDT (1621 GMT). Prices earlier rose to their highest since March 6 at 63.70 cents.
"It has turned very hot and dry in the west Texas area and that looks to persist for the next 14 days or so," said Keith Brown, principal at cotton brokers Keith Brown and Co in Georgia, adding that if conditions remain dry, it could push cotton prices to about 67 cents per lb.
Cotton prices have rallied more than 4% following a United States Department of Agriculture (USDA) acreage report on June 30 that projected a surprise fall in planting acres of the cotton crop.
Investors now eye the USDA's weekly crop progress report due later in the day, for signs for any deterioration in crop conditions amid the unfavorable weather conditions.
The natural fiber has declined over 10% so far this year after worldwide coronavirus-induced lockdowns hammered apparel consumption and cotton demand. "ROW (Rest of the world) stocks are massive at around 69 million bales at the end of July and with new crop approaching fast, a lot of origins will desperately try to find homes for their cotton," Peter Egli, director of risk management at British merchant Plexus Cotton, said in a note on Thursday. But "the problem is that most mills are already covered until the end of the calendar year."
Total futures market volume fell by 13,729 to 12,507 lots. Data showed total open interest gained 21 to 167,427 contracts in the previous session.
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