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ICE Cotton Ends Sharply Up; US, China Arrive At Preliminary Trade Deal

12 Oct 2019 8:58 am
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MUMBAI (Commoditiesontrol) – Cotton prices on the Intercontinental Exchange ended sharply higher on Friday amid optimism surrounding the US-China trade deal as both countries agreed to a preliminary deal.

The most active December cotton contract ended up 4.0% at 63.88 cents per lb. Prices hit an over two-month high of 64.00 cents intraday. Volumes in the December contract zoomed to 39,033 compared with 12,571 a day ago. The March 2020 contract ended up 3.8% at 64.45 cents per lb.

Although traders weren’t expecting a major breakthrough in the trade talks between the US and China, the announcement by US President Donald Trump late Friday boosted sentiment.

Thursday, US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer had met Vice Premier Liu He and other senior Chinese officials to discuss the trade relations between the countries. Friday, Trump met Liu He, in what the former described as “warmer feelings”.

"We've come to a very substantial phase one deal," Trump said after the meeting. "We've come to a deal, pretty much, subject to getting it written."

The US has also called off the tariff increase to 30% on Chinese goods, which was scheduled to come into effect next week. In turn, the Chinese authorities have promised substantial purchases of agricultural products.

"We've come to a deal on intellectual property, financial services, a tremendous deal for the farmers -- a purchase of from $40-50 billion worth of agricultural products," he added.

Meanwhile, cold temperature forecasts in parts of Texas and the Panhandle regions over the weekend also kept prices higher.

The immediate resistance for the December contract is seen around 64.76 cents.

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