Droughts are harming crops in Texas, the U.S.' top grower of the soft fiber, Bloomberg reports, basing its information on the National Weather Service. The high likelihood of spring flooding in more than half of the nation's states is driving cotton futures higher.
"It's time to move into an optimal planting period, and the Texas conditions are too dry, while many other states are too wet," Mike Stevens, an independent trader in Louisiana, told the news service. "That lends the market some support."
At 2:44 p.m. on Wednesday, cotton futures dropped 3.81 percent, a 0.06 cent slip to $1.5151 per pound.
Despite having skyrocketed 89 percent in the past year, cotton futures dove 21 percent in April. That plunge is attributable to decreased demand in China, which is the globe's top importer of the soft commodity.
The month prior, cotton futures rose to a record price of $2.197 per pound.
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.