11 June 2019
NEW YORK: (Reuters): Cotton prices settled higher on Monday as the United States and Mexico, a major importer of US supplies, averted a trade dispute, while investors remained cautious ahead of a crucial monthly crop supply and demand report.
Cotton contracts for July settled up 0.4 cent, or 0.61%, at 65.99 cents per lb. It traded within a range of 64.85 and 66.5 cents a lb. The front month contract snapped four straight sessions of losses, after shedding almost 3.7% last week. The United States on Friday dropped its threat to impose tariffs on Mexico in a deal to combat illegal migration from Central America.
“An agreement with Mexico could put pressure on China to start negotiating,” said Sid Love, commodity trading adviser at Kansas-based Sid Love Consulting, referring to the ongoing trade dispute between the United States and China. Investors are cautious ahead of the release of the USDA’s monthly World Agriculture Supply and Demand Estimates (WASDE) report, due on Tuesday, Love added.
The long-drawn trade spat between Beijing and Washington has toppled markets since its conception a year ago and raised concerns of a slowdown in economy. China’s imports dropped the most in nearly three years, data showed on Monday, in a further sign of weak domestic demand. The United States is one of the world’s biggest exporters of cotton, while China is the largest consumer.
“Cotton has been fundamentally weak because of the fear of a big US crop and a slowdown in the economy,” said John Bondurant, a trader in Memphis, Tennessee, adding that a stronger dollar and lack of cues from the grains markets has not helped the natural fibre.
Total futures market volume rose by 6,361 to 63,976 lots. Data showed total open interest gained 1,189 to 210,156 contracts in the previous session. Certificated cotton stocks deliverable as of June 7 totalled 85,903 480-lb bales, unchanged from 85,903 in the previous session.—Reuters
(Source: Business Recorder)