ICE cotton futures rose on Tuesday as optimism on a prospective trade truce between Washington and Beijing and uncertainty around the crop condition lent further support to the natural fibre. The most-active cotton contract on ICE Futures US, the third-month December contract, was up 0.37 cent, or 0.56%, at 66.95 cents per lb as of 1:48 PM EDT (1548 GMT). It traded within a range of 65.70 and 67.70 cents a lb.
"There is bit more optimism that we will (US) get back to trade normally (with China) and that's probably going to happen. It's just a matter of time," said Sid Love, commodity trading adviser at Kansas-based Sid Love Consulting. The active contract rose as much as 3% in the previous session to touch its highest in a month at 68.35 cents per lb, after US President Donald Trump said Beijing has agreed to buy US farm products and resume trade talks.
However, he also said on Monday that any trade deal with China would need to be "somewhat tilted" in favour of the United States. "Demand for US exports has been soft in recent weeks due, in part, to a lack of Chinese buying - hence this recent headline has inspired some confidence in the market, despite nothing material being announced," Charles Clack, an analyst from Rabobank Australia & New Zealand Group said.
The United States is one of the biggest producers of the natural fibre, while China is the largest consumer. Meanwhile, the US Department of Agriculture's (USDA) crop progress report on Monday showed that only 52% of the crop was in good/excellent condition, while 18% of the natural fibre was in poor/very poor condition. "Looking at the condition of the crop it is not bad but it's not great either. I have never seen a crop like this in all those years and as a result there is more uncertainty," Sid Love added.
Total futures market volume fell by 8,765 to 21,922 lots. Data showed total open interest fell 12 to 175,746 contracts in the previous session. Certificated cotton stocks deliverable as of July 1 totalled 74,351 480-lb bales, down from 76,992 in the previous session.