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Markets

Cotton jumps 2pc on weather threat, hopes of demand rebound

Cotton contracts for July rose 1.49 cent, or 2.6pc, at 59.29 cents per lb by 02:07 p.m. ET (1807 GMT). The con
Published May 19, 2020
  • Cotton contracts for July rose 1.49 cent, or 2.6pc, at 59.29 cents per lb by 02:07 p.m. ET (1807 GMT).
  • The contract rose to its highest since March 17 at 59.49 cents, earlier in the session.
  • US is the biggest exporter of cotton, while China its largest consumer.

ICE cotton futures rose to their highest in more than two months on Tuesday on hopes of a pick-up in demand as economies ease coronavirus-led restrictions and as unfavorable weather in top growing areas in the United States posed a threat to crops.

Cotton contracts for July rose 1.49 cent, or 2.6pc, at 59.29 cents per lb by 02:07 p.m. ET (1807 GMT).

The contract rose to its highest since March 17 at 59.49 cents, earlier in the session.

"Optimism in the market due to reopening of many economies and various government stimulus, along with hot and dry weather in the cotton growing regions are driving gains in cotton," said Sid Love, commodity trading adviser at Kansas-based Sid Love Consulting.

Consumption could rebound next year, Love added.

Several countries are slowly easing lockdowns imposed to curb the spread of the coronavirus. The restrictions had stalled economic activity and hammered demand for apparel, contributing to a 14pc slide in cotton prices so far this year.

Investors also kept a close eye on worsening trade tensions between Washington and Beijing, with Nasdaq Inc set to unveil restrictions that will make it more difficult for some Chinese companies to list there.

US is the biggest exporter of cotton, while China its largest consumer.

Total futures market volume rose by 477 to 20,484 lots. Data showed total open interest fell 1,026 to 176,499 contracts in the previous session.

Certificated cotton stocks deliverable as of May 18 totaled 4,646 480-lb bales, up from 3,579 in the previous session.

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