Investing.com - Cotton futures held steady near the previous session’s 22-month low during early U.S. trade on Monday, as prices continued to be weighed by a U.S. government report forecasting record high supplies of the fiber, though some bargain buying helped limit losses.
On the ICE Futures U.S. Exchange, cotton futures for July delivery traded at USD0.7883 a pound during early U.S. morning trade, dipping 0.2%.
It earlier fell by as much as 0.85% to trade at a session low of USD0.7786 a pound. Prices touched USD0.7716 a pound on Friday, the lowest since July 20, 2010. Futures declined for a ninth session, the longest losing streak since June 4, 2010.
Cotton prices have plunged more than 10% in the two sessions leading up to Monday, including a 3.5% tumble on Friday after the U.S. Department of Agriculture forecast record world cotton supplies.
In its Supply & Demand Estimate Report published May 10, the USDA hiked its estimate on world 2012-13 cotton ending stocks to a record 73.75 million bales, up over 10% from the 2011-12 level.
The agency also projected U.S. cotton yields at 777 pounds per acre in the upcoming season, compared with 790 pounds in 2011/12 and 812 pounds in 2010/11.
The USDA lowered its average cotton price forecast for the upcoming 2012-13 season to a range of USD0.6500 to USD0.8500 per pound, compared with USD0.9100 a pound in the 2011-12 season.
The fiber has plunged almost 65% from a record in March 2011 as higher prices prompted farmers to plant more crops and demand in top consumer China slowed.
Prices came under additional pressure as agricultural meteorologists forecast ample rain in Texas, the top cotton growing state in the U.S.
Cotton traders were looking forward to the USDA’s weekly planting progress report later in the day.
Last week’s report showed that nearly 27% of the cotton crop was planted in Texas, up 25% the previous week, which is also the five-year average.
The U.S. is the world’s biggest exporter of cotton and the third largest producer of the fiber, trailing only China and India.
The bearish sentiment carried over to Monday’s session, with broader market risk aversion exacerbating losses.
Investors continued to monitor political developments in Greece, as the debt-laden country struggles to form a coalition government following last weekend’s elections, fanning fears over a potential Greek default and eventual exit from the euro zone.
Market sentiment came under further pressure amid fears over a deeper-than-expected slowdown in top soy consumer China, following the release of a flurry of disappointing data late last week.
Cotton, as an industrial commodity, is more affected by macroeconomic jitters than many other crops.
The heightened sense of risk aversion prompted investors to shun riskier assets, such as stocks and commodities, and flock to the relative safety of the U.S. dollar.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.35% to trade at 80.70, the highest since March 15.
A stronger dollar reduces the appeal of U.S. crops to overseas buyers and makes commodities less attractive as an alternative investment.
Market talk of a flurry of speculative selling further weighed on the commodity.
Elsewhere, on the ICE Futures Exchange, coffee futures for July delivery was flat to trade at USD1.7665 a pound, while sugar futures for July delivery dipped 0.35% to trade at USD0.2014 a pound.
On the ICE Futures U.S. Exchange, cotton futures for July delivery traded at USD0.7883 a pound during early U.S. morning trade, dipping 0.2%.
It earlier fell by as much as 0.85% to trade at a session low of USD0.7786 a pound. Prices touched USD0.7716 a pound on Friday, the lowest since July 20, 2010. Futures declined for a ninth session, the longest losing streak since June 4, 2010.
Cotton prices have plunged more than 10% in the two sessions leading up to Monday, including a 3.5% tumble on Friday after the U.S. Department of Agriculture forecast record world cotton supplies.
In its Supply & Demand Estimate Report published May 10, the USDA hiked its estimate on world 2012-13 cotton ending stocks to a record 73.75 million bales, up over 10% from the 2011-12 level.
The agency also projected U.S. cotton yields at 777 pounds per acre in the upcoming season, compared with 790 pounds in 2011/12 and 812 pounds in 2010/11.
The USDA lowered its average cotton price forecast for the upcoming 2012-13 season to a range of USD0.6500 to USD0.8500 per pound, compared with USD0.9100 a pound in the 2011-12 season.
The fiber has plunged almost 65% from a record in March 2011 as higher prices prompted farmers to plant more crops and demand in top consumer China slowed.
Prices came under additional pressure as agricultural meteorologists forecast ample rain in Texas, the top cotton growing state in the U.S.
Cotton traders were looking forward to the USDA’s weekly planting progress report later in the day.
Last week’s report showed that nearly 27% of the cotton crop was planted in Texas, up 25% the previous week, which is also the five-year average.
The U.S. is the world’s biggest exporter of cotton and the third largest producer of the fiber, trailing only China and India.
The bearish sentiment carried over to Monday’s session, with broader market risk aversion exacerbating losses.
Investors continued to monitor political developments in Greece, as the debt-laden country struggles to form a coalition government following last weekend’s elections, fanning fears over a potential Greek default and eventual exit from the euro zone.
Market sentiment came under further pressure amid fears over a deeper-than-expected slowdown in top soy consumer China, following the release of a flurry of disappointing data late last week.
Cotton, as an industrial commodity, is more affected by macroeconomic jitters than many other crops.
The heightened sense of risk aversion prompted investors to shun riskier assets, such as stocks and commodities, and flock to the relative safety of the U.S. dollar.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.35% to trade at 80.70, the highest since March 15.
A stronger dollar reduces the appeal of U.S. crops to overseas buyers and makes commodities less attractive as an alternative investment.
Market talk of a flurry of speculative selling further weighed on the commodity.
Elsewhere, on the ICE Futures Exchange, coffee futures for July delivery was flat to trade at USD1.7665 a pound, while sugar futures for July delivery dipped 0.35% to trade at USD0.2014 a pound.