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ICE Cotton Settles With Triple Digit Gains On Speculative Buying

18 Jan 2020 8:35 am
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Mumbai (Commodities Control) – The cotton market ended sharply higher on Friday. Cotton futures rallied 49 to 103 points in the front month futures. Speculatore were definite buyers as hey continued to add to their long positions. This is evident in the rise in open interest.

ICE Cotton contracts for March rose 103 points to settle at 71.25 cents per lb. It traded within a range of 69.95 and 71.35 cents a lb. March futures ended the week with a 1 point loss. While May 20 Cotton closed at 72.19, up 100 points. Jul 20 Cotton settled at 73.06, up 98 points and Oct 20 Cotton ended at 72.92, up 49 points.

"It is kind of a follow through on some of this week' events: we have had a couple of trade deals that went through that has been encouraging some buying activity," said Bailey Thomen, cotton risk management associate with INTL FCStone.

There has been some speculation going on which is pushing prices a little bit higher, added Thomen.

China's state media Xinhua cited comments made on Wednesday by Vice Premier Liu He, saying he sees the signing of the Phase 1 deal as mutually beneficial for future relations between Beijing and Washington.

The U.S.-Mexico-Canada trade agreement (USMCA) was passed by the U.S. Senate on Thursday. The agreement revises the older North American Free Trade Agreement.

The strong weekly export sales report and Dow Jones stoutly over 29K plus added to the buyers' sentiment.

Nearly all of speculative buying has been short-covering, British merchant Plexus Cotton said in a research note on Thursday.

Commitment of Traders report with data and positions from Tuesday the 14th, managed money was listed at 30,263 contracts net long, the highest position on net in 56 weeks. The net long grew wk/wk, as speculative trader Open Interest shorts were 3,909 lower and longs were 5,475 higher wk/wk.

Total futures market volume fell by 1,554 to 24,546 lots. Data showed total open interest gained 109 to 251,730 contracts in the previous session.

Certificated cotton stocks deliverable as of Jan.16 totaled 6,792 480-lb bales, unchanged from 6,792 in the previous session.

Support and resistance for Cotton #2 lies at 69.44 cents and 72.28 cents, respectively.

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