ICE cotton futures fell on Wednesday as investors booked profits after the prior day’s rally to a near two-week high and as caution set in about further demand from China.
The cotton contracts for July fell 0.96 cent, or 1.65%, at 57.38 cents per lb as of 2:06 p.m. ET (1806 GMT), snapping a five-day streak of gains.
Profit-taking is weighing on prices, said Jim Nunn, Owner of Tennessee cotton brokerage Nunn Cotton.
There are “no visible fundamental supports” for the market as yet, he said.
Cotton rose to a near two-month high on Tuesday after a federal monthly demand and supply report projected an increase in US exports and a revival in global demand hit by the coronavirus pandemic in 2020/21. The prices have risen more than 20% since hitting a low of 48.35 cents on April 1, driven by hopes of a pick-up in consumption, especially from top consumer China.
However, the overall demand hit to cotton and apparel due to coronavirus-induced lockdowns and restrictions have driven a nearly 17% drop in prices so far this year.
“There is just hope that there could be some demand from China, which is holding cotton near 58 cents,” said Rogers Varner, President of Varner Brokerage in Cleveland, Mississippi, However, he said, “The market needs to see some hard numbers.”
Total futures market volume fell by 6,463 to 28,713 lots. The data showed total open interest gained 1,462 to 176,193 contracts in the previous session.
