Source: Business Recorder

October 10, 2019

NEW YORK: (Reuters): Cotton prices climbed as much as 1.7% on Wednesday as market sentiment improved after a report said top consumer China might agree to a partial deal with the United States to end the prolonged trade conflict between the two countries.

The most active cotton contract on ICE Futures US, the second-month December futures, was up 0.49 cent, or 0.8%, at 61.81 cents per lb as of 1:13 p.m. EDT (1713 GMT). It rose to 62.38 cents, its highest since Oct. 3, earlier in the session.
Beijing is still open to agreeing a partial trade deal with Washington, Bloomberg reported on Wednesday, citing an official with direct knowledge of the talks, despite the recent blacklisting of Chinese technology firms.

“The possibility of a partial (US-)China trade deal is the biggest (supporting) factor in the market. Nobody knows how much or when but it would be a friendly catalyst to the market if it comes through,” said Rogers Varner, president of Varner Brokerage in Cleveland, Mississippi. On the other hand, the Financial Times newspaper reported that Chinese officials are offering to increase annual purchases of US agricultural products as the two countries seek to resolve their trade dispute.

Negotiators from both the sides are scheduled to meet in Washington on Thursday and Friday. The United States is one of the world’s biggest producers of cotton, while China is the largest consumer. The second-month contract fell about 7% in the previous year and is down about 16% so far this year, largely on the prolonged conflict between the world’s two largest economies.

Meanwhile, market participants are now awaiting the release of US Department of Agriculture’s World Agriculture Supply and Demand Estimates (WASDE) report, due on Thursday. “I think the (WASDE) report tomorrow is going to be neutral and the market maker is the (US-)China trade deal if it happens,” Varner added.

Total futures market volume fell by 7,400 to 15,742 lots. Data showed total open interest gained 364 to 236,328 contracts in the previous session. Certificated cotton stocks deliverable as of Oct. 8 totaled 10,523 480-lb bales, down from 11,136 in the previous session.—Reuters

(Source: Business Recorder)