ICE cotton futures edged higher in low volume trade on Wednesday as extreme heat in major cotton growing regions helped prices to stay afloat, despite share markets tanking because of fears a global economic slowdown has accelerated. The most-active cotton contract on ICE Futures US, the second-month December contract, settled up 0.16 cent, or 0.27%, at 59.57 cents per lb. It traded within a range of 58.94 and 59.87 cents a lb.
"It's pretty unchanged on low volume which to some degree is a little bit of a victory given the (stock) market is down 700 points today," said Keith Brown, principal at cotton brokers Keith Brown and Co in Moultrie, Georgia. Current weather in the US cotton belt - very dry and hot in Texas and in the southeast - has helped cotton prices, Brown added. Equity markets tanked and oil prices fell sharply on Wednesday after a closely watched bond indicator pointed to the growing risk of a US recession.
"The overriding negative fundamental is the US trade war with China. That continues to dominate and cast a shadow over the market. Every time cotton rallies or goes up a little bit, speculators are selling into that rally," Brown said. Cotton has fallen about 19% so far this year owing to a drawn-out trade war between the world's top consumer of the fibre, China, and one of the biggest producers, the United States.
On Tuesday, prices had risen as much as 3% to a high of 59.94 cents a lb after Trump administration backed off the Sept. 1 deadline for imposing 10% tariffs on thousands of Chinese imports while, US and Chinese officials also announced renewed trade discussions.
Investors are awaiting the weekly export sales report due on Thursday from the United States Department of Agriculture (USDA).
Total futures market volume fell by 14,090 to 18,577 lots. Data showed total open interest gained 1,059 to 215,546 contracts in the previous session.
Certificated cotton stocks deliverable as of Aug. 13 totalled 23,908 480-lb bales, down from 23,996 in the previous session.
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