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ICE Cotton Manages Double Digit Closing As China Cuts Tariffs On U.S. Goods

19 Feb 2020 8:02 am
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Mumbai (Commodities Control) – Cotton futures rose over 1% on Tuesday to scale a more than two-week peak after China said it would give tariff exemptions on imports from United States to fulfill trade-deal commitments.

Cotton futures closed Tuesday 38 to 46 points higher. Cotton contracts for May settled 46 points higher at 68.87 cents per lb. Prices hit 69.72 cents/lb, a peak since Jan. 31, earlier in the session. July Contract closed 42 points higher at 69.70 cents, while October Cotton ended at 69.74 cents, up 38 points.

China will grant exemptions on retaliatory duties imposed against 696 U.S. goods, the most substantial tariff relief to be offered so far.

"The tariff relief for imports coming from U.S. and cotton was included in those exemptions and we are seeing some more activity due to that," said Bailey Thomen, cotton risk management associate with INTL FCStone.

Beijing's announcement comes after the Phase 1 trade deal between the two countries took effect on Feb. 14 and is the third round of tariff exemptions China has offered on U.S. goods.

The coronavirus outbreak in China has hampered factory and milling activities.

Meanwhile, the NCC cotton survey shared on Saturday has US growers planting 12.8 million acres of upland cotton and 244,000 acres of ELS varieties. The total would be down 5.5% from last year. The NCC also listed expected exports to China at 2.5 million bales in 2020/21, up from the 2 million projected for 2019/20.

Due to President's Day holiday on Monday, weekly Export-Sales report would be delayed until Friday.

Cotton speculators on the Intercontinental Exchange (ICE) raised net long positions by 2,392 contracts to 14,159 in the week to Feb. 11, data from the U.S. Commodity Futures Trading Commission showed.

Total futures market volume fell by 2,170 to 43,646 lots. Data showed total open interest remained at 211,866 contracts in the previous session.

Certificated cotton stocks deliverable as of Feb. 14 totaled 32,361 480-lb bales, up from 32,152 in the previous session.

Support and Resistance for Cotton #2 lies at 67.70 cents and 70.30 cents, respectively.

(Commodities Control Bureau)

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