Cotton prices settled lower on Tuesday as planting kept pace in South
and West Texas, the largest cotton-producing state, while concerns of
demand meeting abundant production in the United States kept investors
at bay. Cotton contracts for July settled down 0.59 cent, or 0.87%, at
67.32 cents per lb.
It traded within a range of 67.01 and 68.24
cents a lb. "The weather has been drier in south and west Texas where
planting conditions have been really good," said Jack Scoville, vice
president at Price Futures Group in Chicago. "Between prospects of good
planting pace in cotton along with demand concerns, the market is under
pressure. We are not doing business with some of the larger buyers in
the world, i.e. China."
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. Further adding to worries, trade negotiations between the United
States and China looked bleak.
Escalating trade tensions between
the world''s two largest economies have ruffled feathers across markets
since beginning over a year ago, and pushed the cotton contract to
three-year lows last week. "There is no one expecting cotton prices to
drop further from where it already has. Maybe we can go as far down as
60 cents, but we don''t have to," Scoville added.
Total futures
market volume fell by 5,198 to 23,457 lots. Data showed total open
interest fell 3,955 to 214,363 contracts in the previous session.
Certificated cotton stocks deliverable as of May 20 totalled 73,235
480-lb bales, down from 81,507 in the previous session.
Source: Business Recorder, Pakistan Wednesday, 22 May 2019