ICE Cotton Closed Almost Flat On August 9Th

August 9th, the United States Cotton futures Thursday is close to the same level, and market participants will be waiting for tomorrow's announcement of the USDA's supply and demand report.

Dry weather has tightened the supply of cotton in the US, and the slow down of India's output has provided support for price declines. But the downturn is still worrying the market.

Knight Futures's Sharon Johnson said: "because the United States ranks among the world's leading cotton consumption per capita, the financial situation of consumers in the country is crucial to global cotton consumption."

ICE cotton contract in December fell 0.1% or 0.05 cents to 75.95 cents per pound.

Market participants expect a record high of inventory this year, even for the second and third largest producers in the world, India and the US.

After the first break of 77 cents in mid May, investors locked in profits and pushed prices closer to the flat.

The 2012/13 crop season, which began in August 1st, is variable. Traders are speculating whether China will release part of its strategic reserve of the 27 million largest package.

The Chinese government is likely to take some part of it to prepare for the procurement needs of the crop year, which now accounts for nearly half of the final inventory in 2011/12.

Whatever the final move, it may have a decisive impact on Global trade flows, especially if India crops are hit by drought.

The possibility of a longer drought is rising on Thursday, after the US weather agency said cautiously that the El Nino phenomenon that caused the last drought in India will almost certainly appear in the next two months and will continue until 2013.

The India authorities have also issued a drought warning for the first time in three years.

Cotton futures prices have risen 10% since the beginning of the month. The market forecast for the end of the stock market in the US Department of agriculture's Friday report may be larger than the actual situation.

Analysts expect the global final inventory of the 2012/13 crop to be 69 million packs, the highest level since 1960.