Meanwhile, ICE cocoa futures extended their rebound from last week’s  3½-month low, while Liffe cocoa also traded higher. The ICE December contract at midweek settled $80 up at $3,152 a tonne.

On Sept. 11, it had touched $3,057.50 a tonne, the lowest for a second-position contract in 3½ months.  Liffe cocoa for delivery in the same month finished at £2,045 on Sept. 17, up £34 up on the day and  more than £57 off last week’s low of £1,988 a tonne.

Cotton futures fall on China import worries

ICE cotton futures fell  back this week amid increasing speculation that top buyer China shortly will make public details of its pilot subsidy scheme for the country’s farmers, announced earlier this year.

In January, Beijing announced it would scrap its cotton stockpiling program that has been running for the past three years in favour of direct farmer subsidies.

The stockpiling program stimulated import demand on account of high local prices for the fiber and has resulted in inventories in China now holding some 60 percent of the world’s stocks of the fiber, according to U.S. Department of Agriculture (USDA) data.

China’s cotton imports already have been falling ahead of the implementation of the new policy; August imports fell 27 percent on those of July and were 26 percent lower year-on-year.

Cotton for December delivery on ICE finished at 65.55 cents a pound on Sept. 16, down 0.29 cents on the day. ICE December cotton trimmed some of the losses to settle at 65.68 cents  a pound.

Late last week, the December contract had climbed to 68.09 cents a pound,  its highest close in two months following a USDA downgrade of its estimate for U.S. cotton production.

The U.S. is the biggest producer and exporter of the fiber and in its latest World Supply and Demand Estimates (Wasde) report released on Sept. 11, the USDA indicated an almost 1 million-480-pound-bales reduction in its forecast for U.S. cotton output in 2014-2015 compared with its August projection.

The U.S. government department now expects cotton output of 16.54 million bales, down from 17.50 million forecast in August and cited expected output reductions mainly for Texas – the country’s top growing state, Georgia and Arkansas following its second crop survey.

The cotton futures prices are now around 30 percent below the two-year highs reached in early May on worries about the impact of drought conditions affecting in particular the Texas cotton crop. The then most-active contract – May – had touched a two-month high of 95.10 cents a pound in early May.

While care has been taken to ensure that the information contained in this report is accurate, it is supplied without guarantee. The author can accept no responsibility for any errors or any consequence arising from the information provided.