* Record soybeans could hurt cotton plantings later in year
NEW YORK, July 19 (Reuters) – Cotton futures rose almost 1 percent on Thursday on the soaring grains market and as investors shifted their weather watch to India where brokers fear weak monsoon rains could hurt output from one of the world’s largest producers.
Concerns are mounting about a drought in India after rainfall was 22 percent below average across the country in the week to July 18.
While the cotton-growing areas are mainly well irrigated, it has not stopped the market fretting about a potential drop in yields, brokers said.
“There are weather issues overseas, with the largest producer India having monsoon issues,” said Jack Scoville, senior analyst at brokers The Price Group.
The benchmark December cotton contract on ICE Futures U.S. increased 0.97 percent to settle at 72.63 cents per lb, after hitting an intraday high of 73.21 cents.
A summer holiday slowdown and the market’s focus on the blazing grains market as the U.S. Cornbelt continues to scorch has kept trading volumes well below average at under 11,000 lots.
Most traders have been captivated by the U.S. drought and its devastating impact on U.S. soybean and corn crops. Some have started to warn it could have long-term consequences for the cotton market, starting later this year.
Bumper prices in grains, which have set new records almost on a daily basis, are expected to lure farmers away from growing cotton, particularly while prices remain around 70 cents per lb, brokers say. This compares with record highs above $2 per lb last March.
The timing of the soaring soybean prices could be crucial for planting season in the southern hemisphere later in the year.
The price ratio between soybeans, which were at $17.31-3/4 per bushel for August delivery on Thursday, and cotton is around 24:1, which is a multi-year high, brokers have said.
“If it pays more to sow soybean, they aren’t going to plant cotton,” said Scoville.
(Reporting by Josephine Mason; Editing by Andrew Hay)