Cotton futures gained for a second day in New York as extreme heat is increasingly risking the health of crops in top US grower Texas, raising concerns that world supplies could become tighter than analysts previously expected.
Conditions in Texas have worsened, with only 17% of the crop rated as good or excellent as of July 30, the US Department of Agriculture reported Monday. That is even less than the levels seen at the same period last season, a year when severe drought led to widespread damages.
Hot weather across the cotton belt is creating uncertainty about the size of the US crop, said Shawn Wade, director of policy analysis and research at Plains Cotton Growers. “It could be anywhere between 14 million bale to 16 million bale crops. You’ve got some pretty high temperatures settling into parts of Louisiana, Mississippi.”
The most-active futures contract climbed as much as 1.3% Tuesday to 85.85 cents per pound. Cotton has been on an upward trend since late June, aided by mounting concerns over weather not just in the US but also in India, where El Nino threatens to keep cotton areas dryer than normal.
