Source: Business Recorder

October 09, 2019

NEW YORK: (Reuters): Cotton prices fell more than 1.5% on Tuesday as tensions between Washington and Beijing heightened ahead of this week’s trade talks, but an uplift in the grains market helped the natural fiber pare some losses. The most active cotton contract on ICE Futures US, the second-month December futures, was down 0.61 cent, or 1%, at 61.22 cents per lb as of 1:15 p.m. EDT (1715 GMT).
The United States widened its trade blacklist to include some of China’s top artificial intelligence start-ups on Monday, ratcheting up tensions ahead of the trade talks, while President Donald Trump said a quick trade deal was unlikely.

“The market is nervous so, anything anybody says, bullish or bearish, is going to have an impact, but over time we are going to get a trade deal as I think they (China) want it as well as we (US) do,” said Sid Love, commodity trading adviser at Kansas-based Sid Love Consulting.

Chinese Vice Premier Liu said he will meet US Trade Representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin 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, predominantly on the prolonged conflict between the world’s two largest economies. “The market is waiting here to see what happens with the World Agriculture Supply and Demand Estimates (WASDE) but there is not any real changes expected,” Love added.

The US Department of Agriculture is scheduled to release its WASDE report on Thursday. Prices fell as much as 1.7% earlier in the session before recouping some of its losses.

“We have been trading very back and forth... and some of the problems we are having with other grains is starting to spill over into the cotton,” helping the natural fiber pare some losses, said Jon Marcus, president of Lakefront Futures and Options brokerage in Chicago.

US corn, soybean and wheat futures rose on Tuesday, rebounding from weakness in the overnight session after finding technical support, traders said. Total futures market volume fell by 879 to 16,593 lots. Data showed total open interest gained 606 to 235,963 contracts in the previous session.—Reuters (Source: Business Recorder)