Forexpros – Cotton futures were down for a second day on Tuesday, falling to a three-day low as a combination of easing concerns over cotton crop conditions in the U.S. coupled with a broadly stronger U.S. dollar weighed on prices.
On the ICE Futures U.S. Exchange, cotton futures for December delivery traded at USD1.0049 a pound during early U.S. morning trade, dropping 1.76%.
It earlier fell by as much as 1.95% to trade at USD1.0028 a pound, the lowest price since October 27.
The U.S. Department of Agriculture said in its weekly crop progress report, published after markets closed Monday, that nearly 55% of the U.S. cotton crop was harvested as of October 30, up from 44% the week before and above the five-year average of 43%.
In Texas, the largest cotton-growing state in the U.S., nearly 47% of the cotton crop was harvested as of last week, compared to 37% a week earlier, while 51% of crops in Alabama, the third-largest grower, were harvested, up from 40% a week before.
Nearly 42% of U.S. cotton crops were rated in ‘poor’ to ‘very poor’ condition last week, improving from 44% in the preceding week. Approximately 29% of the cotton crop was in ‘good’ to ‘excellent’ condition, unchanged from the week before.
The U.S. is the world’s third largest cotton producer and the biggest exporter of the fiber.
Strength in the U.S. dollar also contributed to losses, as appetite for riskier assets was dented after Greek Prime Minister George Papandreou said that a referendum will be held on the latest aid proposals for the debt-laden country, adding to nervousness over the region’s debt crisis.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, rallied for a second day, jumping 1.4% to trade at 77.72, the highest since October 18.
Cotton prices found some support after Pakistan, the world’s fourth largest cotton grower, lowered its forecast for cotton output in the 2011-12 marketing season to 12.2 million bales, down 6% from a previous estimate, as heavy monsoon rains limited production.
The news raised speculation that Pakistan would have to import more cotton, boosting future demand expectations for U.S. supplies.
Elsewhere, on the ICE Futures Exchange, coffee futures for December delivery tumbled 2.92% to trade at USD 2.2072 a pound, while sugar futures for March delivery sank 1.6% to trade at USD0.2541 a pound.