ICE Cotton Update
Posted : August 22, 2019

Cotton futures rise 1% on short covering ahead of export sales data

ICE cotton futures rose over 1% on Wednesday as some investors covered their short positions ahead of the weekly export sales data due on Thursday and traders said the natural fiber was seeing some pickup in demand at current price levels.

Cotton contracts for December rose 0.70 cent, or 1.18%, to 59.84 cents per lb at 1:25 p.m. EDT (1725 GMT).

"We are seeing support from short covering ahead of what should be another fairly strong, at least, U.S. export report to be released tomorrow morning," said Louis Rose, director of research and analytics at Tennessee-based Rose Commodity Group.

"We think demand at current price levels is considerable."

Traders said they started to see some pickup in international inquiries and last week's export sales data showed net sales of 329,100 running bales (RB) for 2019-2020 marketing year, primarily to Bangladesh and Vietnam....

Cotton has fallen about 19% so far this year as a trade war has strained the business relationship between the United States and China, hurting demand for the natural fiber. China is the world's top consumer of cotton, while the United States is one of the biggest producers.

Investors had piled up record short positions in cotton due to lack of demand and on expectations of higher supplies.

Speculators trimmed their net short position in cotton by 2,865 lots to 49,596 lots, in the week to Aug. 13, data from the U.S. Commodity Futures Trading Commission showed on Friday....

Total futures market volume fell by 4,057 to 14,640 lots. Data showed total open interest fell 668 to 213,645 contracts in the previous session.

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