ICE Cotton Update
Posted : December 04, 2021

ICE Cotton Update

ICE Cotton inches higher on China demand, firm dollar caps gains

ICE cotton futures edged higher on Monday, buoyed by stronger demand from top consumer China, although gains were limited by a stronger dollar as the harvest season progresses.

The cotton contract for December rose 0.16 cents, or 0.1%, to 117.85 cents per lb by 12:21 p.m. ET (1721 GMT). Prices traded within a range of 116.5-118.19 cents per lb.

"Everyone is riveted on the price in China, which is way above U.S. prices, so for the moment the U.S. market is more or less a derivative of the Chinese market," said Rogers Varner, president of Varner Brokerage in Cleveland, Mississippi.

However, prices have "been in a pretty narrow range. Generally, when the harvest has picked up and it's really going strong, the market goes into a downtrend."

Last week, the U.S. Department of Agriculture's weekly export sales report showed net sales of 128,000 running bales, with China being the top buyer.

"Sales are dramatically ahead of the average expected pace for this point of the season, while shipments are modestly off par with historical expectations. China was again responsible for the majority of new crop sales," Tennessee-based Rose Commodity Group said in a note.

Meanwhile, the dollar index rose 0.1% to hover near a 16-month high hit in the last session, making cotton more expensive for other currency holders.

Investors now await USDA's weekly crop progress report due later in the day.

Total futures market volume fell by 32,881 to 24,039 lots. Data showed total open interest fell 10,788 to 276,163 contracts in the previous session.

Certificated cotton stocks deliverable as of Nov. 12 totaled totaled 194 480-lb bales, unchanged from 194 in the previous session.

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