Soft futures mixed; Cotton edges higher after plunging to 5-week low

85 – U.S. soft futures were mixed on Thursday, with cotton prices moving higher as investors returned to the market to seek cheap valuations after prices plunged almost 10% over the previous two sessions.

On the ICE Futures U.S. Exchange, cotton futures for December delivery traded at USD0.8484 a pound, up 0.7%. Prices traded in a range between USD0.8404 a pound, the daily low and a session high of USD0.8517 a pound.

The December contract settled down 5.2% at USD0.8424 a pound on Wednesday, after falling to a session low of USD0.8400 a pound, the weakest level since July 18.

The December contract lost 9.5% in the two session’s leading up to Thursday, the biggest two-day slide since December 2008, amid indications of improving global crop prospects.

The Cotton Association of India said earlier in the week that local farmers will produce approximately 29 million bales of cotton in the 2013-14 marketing season, up 4.6% from last season.

The estimate is one million bales above the U.S. Department of Agriculture’s projection for the country. India is the world’s second-biggest cotton grower after China.

Some technical selling also contributed to losses as a wave of long liquidation by institutional investors was triggered after prices broke below key support levels.

Meanwhile, sugar futures for October delivery traded at USD0.1631 a pound, down 0.25%. Prices of the sweetener fell by as much as 0.5% to hit a daily low of USD0.1627 a pound, the weakest level since July 25.

The October contract settled down 0.9% at USD0.1632 a pound on Wednesday.

Sugar prices came under pressure as the Brazilian real traded near a four-and-a-half-year-low against the U.S. dollar, encouraging growers to sell their crops.

Brazil is the world’s largest producer and exporter of sugar. When its currency weakens, farmers tend to ship more sugar, as it increases the value of overseas income at Brazilian exporters when repatriated.

Elsewhere, Arabica coffee for December delivery traded at USD1.1775 a pound, up 0.25%. The December contract settled down 1.4% at USD1.1715 a pound on Wednesday, the lowest level since August 2.

Arabica coffee futures were also pressured by weakness in the real. Brazil is the world’s largest producer and exporter of Arabica coffee.