By Julie Wernau
Cotton prices started the week in a slump Monday, with China unloading its vast cotton reserves on the market at a time when the planting conditions in the U.S. are on track.
Cotton for July delivery dropped 0.8% to end at 61.33 cents a pound on ICE Futures U.S. exchange, the lowest close since April 15.
China was once the largest consumer of cotton but recently scaled back on imports as it attempts to unwind from its strategic stockpiles of cotton.
The International Cotton Advisory Committee said last week that China has moved its daily limit for reserve sales to 50,000 metric tons from 30,000 metric tons.
Meanwhile, U.S. cotton plantings are on track. For the week ended May 1, 16% of the estimated 2016 crop had been sown, and analysts reported that weather conditions have been favorable to plantings in major growing regions in the U.S.
U.S. sales of cotton abroad aren’t keeping up with USDA expectations, with sales at 88% of the USDA forecast versus a five-year average of 100.2%, according to the Hightower Report. That has some traders expecting higher ending stocks for the marketing year, when the USDA releases its monthly estimates of world agricultural supply and demand for cotton.
In other markets, raw sugar futures for July closed up 0.9% at 15.88 cents a pound; cocoa for July edged higher, up 0.2% to end at $3,079 a ton; July arabica coffee rose 1.6% to settle at $1.2645 a pound; and July frozen concentrated orange juice rose 0.3% to close at $1.4105 a pound.