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ICE Cotton slips on Mid- East Tensions; Marks 5th Straight Weekly Rise

4 Jan 2020 8:06 am
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Mumbai (Commodities Control) - ICE cotton futures on Friday slipped from a seven-month high reached in the previous session as risk sentiment soured after a U.S. strike killed top Iranian commander. For the week, prices are up marking their fifth consecutive weekly gain, mainly supported by signs of a breakthrough in the U.S. China trade relations.

March futures gained 30 points through the week’s trading activity.

The front-month March contract fell 7 points, at 69.20 cents per lb. The front-month cotton contract had risen to its highest level since early June in the last session. May 20 cotton settled at 70.38 cents, down 7 points. While July 20 and October 20 Contracts closed down 7points each, to end at 71.27 cents and 71.47 cents, respectively.

The U.S. Department of Agriculture (USDA) in its weekly export sales report released earlier showed net sales of 246,200 running bales (RB) for the 2019/20 marketing year, up 82% from the previous week and was 7.88% higher than the same week last year.

The monthly cotton consumption and stocks report showed that 1,541 RB were consumed in November, and stocks were 1,560 RB as of the last Saturday of November.

The Seam added 19,551 bales sold on 2nd January 2020, for a weekly total of 52,173 bales. The 2nd January Cotlook A index was at 77.85 cents/lb followed by 50 point fall. The cotton AWP from 2nd January was 59.63 cents/lb, following a 78 point increase.

Iran promised retaliation after a U.S. air strike in Baghdad on Friday killed Qassem Soleimani, Tehran's most prominent military commander, ratcheting up tensions in the Middle East.

Risk managers, noted that the tensions in Middle East did put a damper on a lot of commodity markets.

Oil prices surged as much as $3 a barrel and safe-haven gold, yen and bonds all rallied after the overnight attack.

U.S. President Donald Trump earlier this week said that Phase 1 of trade deal with China would be signed on Jan. 15.

The export sales data was delayed by a day due to the New Year holiday.

Next week the market returns to a normal trading schedule. Weekly sales and exports return to their Thursday slot, while the Labor Department will release its jobs data on Friday. Last month’s jobs report far exceeded all analysts’ expectation, and set a positive tone not only for the financial markets, but the cotton market as well.

Total futures market volume fell by 11,789 to 22,378 lots. Data showed total open interest gained 5,060 to 226,857 contracts in the previous session.

Certificated cotton stocks deliverable as of Jan. 20 totaled 9,038 480-lb bales, down from 9,127 in the previous session.

The support and resistance for active-contract stands at 67.99 cents and 70.21 cents/lb., respectively.

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