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Cotton Falls from 2 Year Highs

August 11, 2016 at 15:02 by Brent Lantzy

The most actively traded December cotton contract on the ICE is up by 0.35 cents to 71.79 cents per pound as of 14:36 GMT on Thursday.

The December contract has been bearish this week, posting losses in the last 3 trading sessions after touching a two year high of 77.98 per pound on Friday, August 5. On Wednesday, the contract settled down by the maximum 3 cent daily trading limit. ICE expanded that limit to 4 cents for Thursday, however the fiber only traded between 71.00 and 72.90, settling down by 1.61 cents (2.20%) to 71.44 cents per pound.

Unfavorable weather conditions in major producing regions in India and the United States have made for the continued prospect of tight global supplies. A Bloomberg survey showed that world inventories are expected to be smaller than the USDA estimated last month.

The USDA will publish an updated World Agricultural Supply and Demand Estimates report in addition to the updated Cotton Ginnings report, both due to be released at 16:00 GMT on Friday.

Chinese officials confirmed on Monday that they would extend their annual cotton auction an additional month through the end of September due to a 47% increase in prices over the previous 5 months and complaints of shortages from mill owners, according to The Wall Street Journal.

In the week ended August 2, CFTC data shows that market participants in futures and options increased their net long positions to 76,468 contracts, the highest level since August 2013.

The Cotlook ‘A’ index was down 3.00 cents to 82.20 cents per pound as of 13:28 GMT on August 10.

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