Cotton prices continued to drift lower Wednesday, after hitting limit down a day earlier, as the market remained uncertain about the impact of Hurricanes Harvey and Irma and their consequences for U.S. cotton producti-on.
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Cotton futures for December delivery dropped 0.5% to 68.80 cents a pound. Prices tumbled 4.2% on Tuesday, as traders were taken aback by the U.S. government's rosy outlook for the country's cotton crop in spite of the recent inclement weather events.
Hurricane Harvey struck Texas Aug. 25, wreaking havoc on the crop in the nation's largest cotton-producing state. Over the weekend, Hurricane Irma hit Florida, another cotton-growing state. Yet, the USDA raised its estimate for U.S. cotton production by 1.2 million bales to 21.76 million bales, or 27% higher year-on-year, in its crop report released Tuesday. The forecast was higher than all estimates by analysts surveyed by the Wall Street Journal.
Nevertheless, the USDA said late Tuesday that the estimates didn't take into account the hurricanes' impact and it would assess those effects on cotton and incorporate any possible changes in its upcoming October crop report.
"Everybody is sure it will be less than what it was now, but they just don't know by how much," said Louis Rose, founder of Rose Commodity Group. Mr. Rose estimated that about 400,000 bales of cotton--both in the field and those that had been harvested--were lost in Harvey.
Still, the U.S. is expected to harvest a bumper crop in 2017/2018, driven by a higher acreage and a record yield in the cotton field. Many U.S. farmers have switched to plant cotton as they were buoyed by the robust export demand.
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"It's very bearish on the supply side; it's hard not to be bearish," Mr. Rose said.
USDA's National Agricultural Statistics Service said in a note that the report didn't reflect the significant impact caused by recent hurricanes and the subsequent flooding. For upland cotton, the agency will collect harvest-acreage information from producers in Alabama, Florida, Georgia, Louisiana, South Carolina and Texas to "better assess the full impact."
In other markets, orange juice for November was up 0.6% at $1.5815 a pound, cocoa for December added 1.2% to $1,974 a ton, arabica coffee for December rose 1.2% to $1.3660 a pound, and raw sugar for October gained 1.9% to 14.29 cents a pound.
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(END) Dow Jones Newswires
September 13, 2017 11:57 ET (15:57 GMT)