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Cotton prices plumping up as more rains likely in Texas

YarnsandFibers News Bureau 2015-06-29 15:00:00 – Texas

Heavy rains have hit Texas, the largest cotton-growing state in the U.S. Most of the cotton is grown in West Texas, which is recovering from a four-year drought. Many areas haven’t seen more than two days in a row without rain this month, which has made it difficult to plant crops. If crop yields in Texas are lower or if the harvest is delayed and the maturing crop gets too wet from seasonal rains, it could create a temporary shortage of quality fiber.

Heavy rains during the month of April and May has delayed cotton planting in several states, including top producer Texas. Investors are betting the land that was planted with cotton will fall short of the 9.5 million acres U.S. farmers had said they intended to sow with cottonseed. The U.S. Department of Agriculture will report the planted acres on Tuesday.

Cotton prices are plumping up as investors await word on the state of the next U.S. crop.

Cotton for December delivery increased 5.6% for the latest week to 67.51 cents a pound, the highest close since April 30. Friday’s 3.3% jump was the biggest daily gain in two months for the most actively traded cotton contract on the ICE Futures U.S. exchange.

The harvest is likely to run behind schedule due to the late start of the planting. The spring rains, which ended a four-year drought in Texas, also made it difficult for growers to get the seed into the fields. As of June 21, 94% of the planned U.S. cotton acreage had been sown, while in previous years planting was complete at this point. However, traders said that a smaller number of acres doesn’t necessarily mean less cotton.

The USDA has predicted the U.S. would produce less cotton in the year ahead than in the current year, but demand will remain near the lowest in more than a decade as apparel and textile companies turn to synthetic fibers. The U.S. is the world’s largest cotton exporter.

At the same time, China, the world’s biggest cotton consumer, is buying fewer bales as it tries to whittle down strategic stockpiles acquired a few years ago, while the industry is dealing with lagging demand for cotton as consumers seek synthetic fabrics that wick away moisture.

However, the net export sales in the week ended June 18 reached 60,500 running bales of cotton, and cumulative sales to date are already greater than the USDA’s export estimate of 10.7 million bales. Each bale weighs 480 pounds.

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