ICE Cotton Update 06-Aug-2020
Posted : August 07, 2020

ICE Cotton futures jump on increased U.S. exports to China

ICE cotton futures rose on Thursday after a federal report showing robust exports of U.S. cotton to China relieved producers from fears of losing business due to ongoing trade tensions between the two nations.

Cotton contracts for December rose 0.31 cent, or 0.5%, at 64.77 cents per lb at 01:44 p.m. EDT (1744 GMT).

Prices earlier in the session hit 65.05, just 0.04 cents shy of their highest since early July, when prices jumped to an over four-month peak.

"A strong export sales report showing China back in business with the United States is a big supporting factor," said Ed Jernigan, chief executive of Jernigan Global, a cotton textile supply chain manager.

The Aug. 15 meeting scheduled between U.S. and China to review their Phase 1 trade deal is also encouraging markets, he added.

The U.S. Department of Agriculture's (USDA) weekly export sales report showed exports of 346,800 running bales were up 8% from the previous week, out of which 116,700 running bales were shipped to China.

"Evidence of index fund buying continues to emerge, and such may have been inspired by a continued weakening of U.S. currency (dollar)," Louis Rose, director of research and analytics at Tennessee-based Rose Commodity Group, said in a note.

However, physical demand for the natural fiber has been hammered by lockdowns imposed to contain the global virus pandemic, which has led to a loss of 7.8% in cotton contracts so far this year.

"In absence of much physical demand and only trading higher on technical factors and political headlines, cotton will find a pretty decent resistance at 65 cents," Jernigan said.

Total futures market volume rose by 1,084 to 25,168 lots. Data showed total open interest gained 5,443 to 186,675 contracts in the previous session.

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