The harvest of cotton in the globe's second-biggest grower is set to decline due to inclement weather, according to Bloomberg.
India is enduring the worst monsoon in three years, which is drying out fields and cutting into planting of the soft fiber. The challenges run the risk of slashing exports of cotton from the subcontinent for the first time in 36 months. Gujarat, the largest producing state in India, is poised to see reductions of 30 percent for the harvest beginning October 1.
"The outlook for the 2013 crop suggests global supply might be squeezed due to competition for acreage from crops like soybeans, and the weak monsoon in India," states an email authored by analyst Abah Ofon with Standard Chartered to Bloomberg. "Output is being disincentivised at current price levels and we believe global supply will be lower next year."
At 8:59 a.m. on Tuesday, cotton futures fell 0.92 percent, a 0.07 cent slip to 75 cents per pound.
Reuters reports the soft commodity was coming off its highest price in about 10 weeks on Monday as a result of reports of possible restrictions from India, which trails only the U.S. for exports.
Risk Disclosure
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.
