Cotton futures rose on concern that a persistent drought will reduce output in Texas, the top U.S. producer.
Cotton areas in West Texas won’t get rain through at least June 16, Paul Markert, a meteorologist at MDA Information Systems Inc. in Gaithersburg, Md., said in a telephone interview on June 7. On June 12, USDA may cut its estimate for annual output in the U.S., the world’s biggest exporter, because of the drought, according to the average of seven analysts in a Bloomberg survey.
The crop loss in the Southwest "will be major and substantial," O.A. Cleveland, an agricultural economics professor at Mississippi State University in Starkville, said in a report.
Cotton for July delivery increased 0.8 percent to 85.51 cents a pound at 11:53 a.m. on ICE Futures U.S. in New York. Through June 7, the price climbed 13 percent this year.
The first notice date for the July contract is June 24, when holders of futures must notify counterparties whether they intend to take delivery. As of June 7, open interest, or the number of contracts that have yet to be closed, was 80,193.
"This suggests there is a lot of interest in the certified stocks," John Flanagan, the president of Flanagan Trading in Fuquay-Varina, North Carolina, said in a report.