Forexpros – Cotton futures were down sharply on Tuesday, after government data showed that U.S. crop conditions improved last week, easing concerns over tightening supplies, while a stronger U.S. dollar also weighed.
On the ICE Futures U.S. Exchange, cotton futures for October delivery traded at USD1.0333 a pound during European morning trade, tumbling 2.2%.
It earlier fell as much as 2.5% to trade at a daily low of USD1.0302 a pound.
The U.S. Department of Agriculture said in its weekly crop-progress report on Monday that approximately 30% of U.S. cotton crops were rated in ‘good’ to ‘excellent’ condition as of July 31, up from 29% a week earlier.
U.S. crops rated ‘poor’ to ‘very poor’ fell to 40% from 41% a week earlier.
In Texas, the largest cotton-growing state in the U.S., nearly 43% of cotton crops were rated ‘fair’ to excellent’, while 68% of crops in Alabama, the third-largest grower, were in ‘fair’ to ‘excellent’ condition.
The U.S. is the world’s third largest cotton producer and the biggest exporter of the fiber.
Meanwhile, the International Cotton Advisory Committee cut its 2011-12 forecast for global cotton supplies by a lower-than-expected 500,000 tonnes to 26.9 million, it said on Monday.
The ICAC also downgraded its forecast for global cotton consumption by 200,000 tonnes to 25.0 million tonnes, saying demand would be “moderated by relatively high cotton prices and competition from chemical fibers”.
Strength in the U.S. dollar also weighed on prices. The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.3% to trade at 74.75, after rising earlier to 74.83, the highest since July 21.
A stronger dollar reduces the appeal of U.S. crops to overseas buyers and makes commodities less attractive as an alternative investment.
Elsewhere, on the Chicago Mercantile Exchange, wheat for September delivery eased down 0.1% to trade at USD6.7563 a bushel, corn for September delivery shed 0.57% to trade at USD6.7788 a bushel, while soybeans for September delivery dipped 0.12% to trade at USD13.5263 a bushel.