Source: Business Recorder

November 12, 2019

NEW YORK: (Reuters): ICE cotton futures eased on Monday as escalating violence in Hong Kong and US-China trade tensions weighed on investor sentiment, while a positive supply-demand report last week provided some support to the natural fiber.

Cotton contracts for December fell 0.42 cent, or 0.65%, to 64.30 cents per lb by 1:10 p.m. EST (1810 GMT), trading within a range of 63.73 to 64.85 cents per lb.

“The WASDE report on Friday was friendly, but the news about Hong Kong sort of pushed the market off the rail overnight and this morning,” said Keith Brown, principal at cotton brokers Keith Brown and Co in Moultrie, Georgia, adding that uncertainty around a US-China trade deal was also weighing on the market. “But the trend of the cotton market is now up,” Brown said.

On Friday, cotton prices rose as much as 1% after the US Department of Agriculture in its monthly World Agricultural Supply and Demand Estimates (WASDE) report lowered US and world production and ending stocks estimates for the 2019/20 crop year.

In the 24th straight week of pro-democracy unrest, Hong Kong police shot and wounded a protester in a rare instance of working-hours violence in the Chinese-ruled territory. Escalation of violence in Hong Kong and US President Donald Trump’s remarks over the weekend on US-China trade rattled equity markets around the world.

Dashing recent investor optimism, Trump said on Saturday that the United States would make a deal only if it was the “right deal” for America, adding that the talks had moved more slowly than he would have liked. The natural fiber has fallen more than 10% so far this year, mainly due to the prolonged trade dispute between cotton’s top consumer China and one of the top producers, the United States.

Meanwhile, cotton speculators increased their net short position by 1,469 contracts to 6,098 in the week ended Nov. 3, according to data from the Commodity Futures Trading Commission released on Friday.

Total futures market volume fell by 19,467 to 53,212 lots. Data showed total open interest fell 7,206 to 239,068 contracts in the previous session. Certificated cotton stocks deliverable as of Nov. 8 totaled 46,985 480-lb bales, up from 42,441 in the previous session.—Reuters (Source: Business Recorder)