ICE Cotton Update
Cotton futures touch 2 – week low on WASDE's China demand cut
ICE cotton futures dipped to a two-week low on Wednesday, as projections for lower Chinese consumption in a monthly U.S. federal crop supply-demand report weighed.
Cotton contract for December was down 1.84 cents, or 1.7%, at 104.54 cents per lb, by 12:58 p.m. EDT (1658 GMT), having earlier eased to its lowest since Sept. 30.
"For the most part, you've seen a good bit of technical damage once we fell below 109 cents... we are also seeing some profit taking and mill fixations," said Jim Nunn, owner of Tennessee-based cotton brokerage Nunn Cotton.
"People are concerned that the U.S Department of Agriculture (USDA) lowered China's usage and did nothing with the size of the crop," Nunn said.
In its October World Agricultural Supply and Demand Estimates (WASDE) report, the USDA lowered China consumption by 1 million bales, citing high prices and energy crisis denting industrial activity. ...
Further, the agency projected global production at 120.28 million bales for the 2021/22 crop year, about 700,000 bales higher than the previous month.
The USDA also raised its global ending stock estimate by 450,000 bales to 87.13 million bales.
Last week, cotton prices rose to their highest level in 10 years, mainly driven by strong demand from top-consumer China.
Meanwhile, the USDA's weekly crop progress report on Tuesday showed 64% of the cotton crop was in a good-to-excellent condition in the week ending Oct. 10, up from 62% in the prior week.
Total futures market volume fell by 7,588 to 33,350 lots. Data showed total open interest fell 1,752 to 286,879 contracts in the previous session.