ICE cotton futures rose to a near one-week high on Thursday helped by a positive US government export sales report that included sales to China and on hopes of more demand from the top consumer.
Cotton contracts for July rose 1.13 cent, or 2.07%, to 55.64 cents per lb. as of 2:14 PM EDT (1814 GMT). It traded within a range of 54.42 and 56.45 cents a lb, the highest since May 1.
"Exports were good and the shipments were better," said John Bondurant, a trader in Memphis, Tennessee, adding it looks like China's plan is to buy more U.S cotton to boost state reserves and the market has been helped by it.
The United States Department of Agriculture's weekly export sales report showed net sales of 370,300 running bales (RB) for 2019/2020 and included 217,500 RB from China, a large buyer of cotton.
Exports were 370,300 RBs, up 46% from the previous week and 12% from the prior 4-week average.
Adding to the upbeat sentiment were hopes business activity will pick up as several US states ease coronavirus-induced restrictions.
The market has found a floor at 52-53 cents per lb, which may be good, said Jim Nunn, owner of Tennessee cotton brokerage Nunn Cotton. He added that psychologically 52 cents is the baseline for cotton and people may think that's what's giving it some support.
Cotton prices have declined 20% so far this year as coronavirus-led restrictions sapped demand.
"The world economy is beyond horrible, it's almost in a depression and that's hardly good for cotton consumption. The recovery (in apparel demand) is going to be extremely slow", Bondurant added.
Millions more Americans sought unemployment benefits last week, suggesting layoffs broadened across economic segments and could remain elevated even as many parts of the country reopen.
Investors also kept a watch on brewing US-China tensions, with US President Donald Trump stating he would be able to report in about a week or two whether China is fulfilling its obligations under its Phase 1 trade deal, as his administration weighs imposing additional tariffs.
Total futures market volume rose by 574 to 22,443 lots. Data showed total open interest fell 1,660 to 174,593 contracts in the previous session.
Comments
Comments are closed.