Cotton and Coffee See a Boost on Weather and Export Concerns

by on November 26, 2013 3:04 am GMT

The soft commodities have been hit hard this year, but cotton and coffee prices have been given a short pardon and steadily decreasing prices. Cotton futures increased to three-month highs and coffee seen an increase after some bearish sentiment was lifted.

Cotton prices increased on the report of crops being affected by rain in the Southeastern United States. Jack Scoville, Price Futures Group, said the rain “could hurt some volume and certainly will hurt the harvest progress in the coming week.”

The March delivery for Cotton increased 1.5 percent to 78.30 per pound in the ICE futures exchange. This represented the largest gain for the most-active contract since August 16.

The bearish sentiment has been lifted slightly as coffee futures increased. The net-short coffee positions were cut 21 percent on slow exports from the leading producer, Vietnam.

The Commitments of Traders report showed a net-shot position of 8,490 contracts (futures and options) in the week ending on November 19 compared to the net-short of 10,792 contracts in the previous week.

“Prices rallied last week on speculative short covering, low certified stockpiles, with expectations of further inventory draw-downs, given weight by the lack of coffee coming out of Vietnam,” Toby Donovan, a broker at BGC Partners LLC.

Robusta coffee supplies exceed 2013-14 demand by 2.4 million bags. The arabica verity, used mostly in specialty drinks, will exceed demand by 6.4 million bags.

1D Chart of KC (Coffee futures)

1D Chart of KC (Coffee futures)

1D Chart of CT (Cotton futures)

1D Chart of CT (Cotton futures)