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ICE Cotton Ends Firm On China Import Quota Announcement

13 Apr 2019 8:36 am
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MUMBAI (Commoditiescontrol) – Benchmark cotton prices on the Intercontinental Exchange ended up Friday on expectations of demand from China after the country announced its import quota for cotton. Managed money was seen covering short position which also supported the market.

The July contract ended up 1.4% to 78.86 cents /lb. Volumes were at 26,651 compared with 24,841 the previous day. The May contract also rose 1.5% to 78.11 cents. While December contract managed to close with gains of .8% at 77.19cents/lb. Volumes were at 21,717 compared with 26,656 a day ago. Old crop contracts were relatively higher due to rollover and market expecting strong sales and shipment in short term.

Thursday, The National Development and Reform Committee, China’s planning department announced that it has approved cotton sliding tariff import quota of 800,000 tonnes for 2019.

The announcement against the backdrop of the progressing US-China talks raised sentiment in the market, pushing up prices.

As per cot report managed for week ending 09 April Managed money reduced their short position by 5634 and added long position by 311 lots thereby taking their net long position to 14652 lots.

The dollar’s weakness also helped prices as a weaker dollar turns out to be less expensive for countries importing commodities such as cotton, thereby increasing demand. The dollar index fell 0.2% on Friday against a basket of currencies at 96.598.

Monday, the USDA will be released the weekly planting progress report which will give an indication if production is in line to meet the expected demand.

As on April 7, the 15 cotton-growing states in the US had planted 6% of the crop compared with 7% a year ago.


The market is likely to remain firm until rollover from May to July contract is complete. This week market will be looking at USDA planting progress, US export sales data and progress in US-China trade talks.

Support and resistance for July contract are at 77.56 and 79.61cents/lb.

(By Commoditiescontrol Bureau)


       
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