ICE cotton futures edged up on Tuesday, rebounding from a 3-1/2-year lows touched in the previous session, as the natural fiber drew support from declining US crop ratings. Cotton contracts for December rose 0.15 cent, or 0.26 %, at 57.97 cents per lb at 01:16 pm EDT (1716 GMT). It traded within a range of 57.4 and 59.49 cents a lb. "The crop condition numbers went down and (prices) little below under 60 cents we see a little short covering," said Keith Brown, principal at cotton brokers Keith Brown and Co in Moultrie, Georgia.
"Cotton will hold 54 cents-60 cents range. The market is also watching the path of Tropical storm Dorian." The USDA's weekly crop progress report on Monday rated 43% of US cotton as good-to-excellent condition, down 6 percentage points from a week ago. "The USDA's subjective ratings seem to now be reflecting what many (including us) have suspected for some time - the US crop is not as good as the USDA estimated in its July and Aug WASDE reports," Louis Rose, director of research and analytics at Tennessee-based Rose Commodity Group said in a note.
Traders and analysts attributed the fall in crop conditions to deterioration in cotton quality in Texas, the biggest cotton growing region in the United States, due to heat. Cotton has fallen 21% so far this year as the US-China trade war has hurt demand for the natural fiber. China is the world's top consumer of cotton, while the United States is one of the biggest producers.
Last Friday, US President Donald Trump lashed back at a new round of Chinese tariffs by heaping an additional 5% duty on some $550 billion in targeted Chinese goods in the latest tit-for-tat trade war. US Treasury Secretary Steven Mnuchin said there had been contact between the US and China but declined to say with whom but China's foreign ministry denied any recent telephone call with the United States on trade. Total futures market volume fell by 3,856 to 23,242 lots. Data showed total open interest gained 2,026 to 218,885 contracts in the previous session.