November 08, 2019
NEW YORK: (Reuters): ICE cotton futures rose over 1% on Thursday as renewed optimism that the United States and China will reach a deal boosted buying interest in the natural fiber ahead of the US Department of Agriculture’s (USDA) monthly crop supply and demand report. Cotton contracts for December rose 0.75 cent, or 1.2%, to 64.44 cents per lb by 12:16 p.m. ET (1716 GMT), trading within a range of 63.46 and 64.85 cents per lb.
“Positive vibes from the US-China trade front are behind today’s strength,” said Peter Egli, director of risk management at British merchant Plexus Cotton. China and the United States have agreed to cancel, in phases, the tariffs imposed during their protracted trade war, the Chinese commerce ministry said, without specifying a timetable. Wall Street’s main indexes hit fresh record highs on the signs of progress in US-China trade relations. The natural fiber has slid by about 11% so far this year owing to a long trade tiff between cotton’s top consumer China and one of the top producers, the United States.
“We need something firm in writing what the Chinese are going to do about US cotton and have some type of agreement to see a rally in the cotton market,” said Jim Nunn, owner of Tennessee cotton brokerage Nunn Cotton.
Meanwhile, the USDA in its weekly export-sales report showed net sales of 164,500 running bales (RB) for 2019/20 marketing year, up 52% from the previous week and 2% from the prior four-week average, for the period ended Oct. 31.
“Export sales were strong and I expect that to continue as long as US cotton remains one of the cheapest origins next to Brazil,” Plexus Cotton’s Egli said. Investors focus shifts to World Agriculture Supply and Demand Estimates (WASDE) report scheduled for release on Friday by USDA.
Total futures market volume fell by 8,693 to 40,180 lots. Data showed total open interest gained 700 to 248,399 contracts in the previous session. Certificated cotton stocks deliverable as of Nov. 6 totaled 39,233 480-lb bales, up from 36,110 in the previous session.—Reuters (Source: Business Recorder)