US cotton rises 1pc on supportive export sales data

ICE cotton futures rose 1% on Thursday, moving away from 3-1/2-year lows touched earlier in the week, helped by a positive export sales data and as some investors covered short positions ahead the monthly supply, demand report.

* The most-active cotton contract on ICE Futures US, the second-month December contract, rose 0.57 cent to 59.40 cents per lb as of 12:24 p.m. EDT (1624 GMT).

* The contract touched its lowest since March 2016 at 57.26 cents a lb on Monday.

* The weekly export sales report from the US Department of Agriculture showed net sales for 2019-2020, which began Aug. 1, totaled 179,500 running bales (RB), with increases reported for China (60,100 RB), India, Japan and Vietnam.

* "The catalyst for this rally is China did buy 60,000 bales in the new crop. That's really not a lot of cotton, but that's the most she has bought in a lot of time. The psychology of having China in the market buying US cotton was a little friendly,"

said Keith Brown, principal at cotton brokers Keith Brown and Co in Moultrie, Georgia.

* "The market is oversold. We do have a supply demand numbers coming (next week) and there is some short covering ahead of the week-end."

* US President Donald Trump on Tuesday vowed to protect American farmers against China by signaling to provide further aid if needed, a day after Chinese firms stopped agricultural purchases and Beijing threatened more tariffs on US farm products.

* Cotton has fallen about 19% so far this year owing to a drawn-out trade war between the world's top consumer of the fiber, China, and one of the biggest producers, the United States.

* "Net speculative short has inched higher on the week to 62,000 lots. This is at levels not seen since Aug-2014. According to our estimates dating back the last 15 years or so, cotton has rarely maintained a short larger than 50,000 for an extended period of time," Guy Wolf, global head of market analytics, Marex Spectron said in a note.

* Investors await the release of the US Department of Agriculture's (USDA) monthly World Agriculture Supply and Demand Estimates (WASDE) report, due on August 12.

* Total futures market volume fell by 8,337 to 18,558 lots. Data showed total open interest gained 3,858 to 210,502 contracts in the previous session.