The harvest that began in August will see farmers produce 0.3 percent more cotton than originally forecast in September, according to a report issued by the U.S. Agriculture Department. Production is projected to be on the increase in California, Mississippi and Georgia, which will compensate for the worst drought in 100 years in Texas, which otherwise is the soft fiber's top-producing U.S. state.
"There's more supply and less demand," President Keith Brown of Georgia broker Keith Brown & Co.told Bloomberg. "Global inflation is affecting foodstuffs, and people will go to that before they go to cotton."
At 2:36 p.m. on Wednesday, cotton futures fell 2.86 percent, a 2.96 cent slip to $1.0051 per pound.
Agrimoney reports analysts with Rabobank labeled the soft commodity's performance "strongly bearish" while also noting cotton futures can rebound if they are boosted by user purchases and concerns about sharp corrections in preparation for the spring planting season.
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.
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 trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.