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ICE Cotton Gains On Firmer Equities, Mkt Eyes WASDE & Weekly Export Sales

9 Apr 2020 8:38 am
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Mumbai (Commodities Control) – Cotton extended the rally by another 75 to 94 points on Wednesday. ICE cotton futures climbed to a two-week peak on Wednesday as stock markets gained on hopes the novel coronavirus outbreak was close to its peak, while investors await the USDA's monthly supply-demand report and the weekly export sales data.

The cotton contract for May settled up 94 points at 53.84 cents per lb. Earlier in the session the contract hit a high since March 25 at 54.13 cents per lb. July Cotton closed at 53.94 cents, up 78 points. October Cotton closed at 55.29 cents, up 75 points and December Cotton closed at 55.37, up 89 points.

"Cotton seems to be following the optimism on the equities market," said Bailey Thomen, cotton risk management associate with INTL FCStone, adding it is uncertain if the optimism around coronavirus leveling off will continue.

Pre-WASDE estimates show traders anticipate a 60,000 bales cut to 2019/20 cotton production, to 19.74 million bales. Traders estimate cotton ending stocks will be 5.56 million bales, which would be a 460,000 increase from March USDA’s Attaché estimated 2020/21. Egyptian cotton imports at 630,000 bales (up 23% yr/yr), due to lower domestic production. With a similar situation unfolding in Pakistan, the USDA Attaché estimates an 8% increase to 4.5 million bales of 2020/21 cotton imports for the nation.

The U.S. Department of Agriculture's (USDA) monthly World Agriculture Supply and Demand Estimates (WASDE) report is due on Thursday, along with the weekly export sales data.

Wall Street rose on hopes the coronavirus pandemic is peaking, with health insurers boosted by Democratic presidential candidate Bernie Sanders suspending his campaign.

Meanwhile, Wuhan, the Chinese city where the new coronavirus emerged ended its more than two-month lockdown on Wednesday, even as a small northern city ordered restrictions on its residents amid concern about a second wave of infections.

More than 83,000 coronavirus-related deaths globally and nearly 1.4 million infections.

There are signs of a plateau in hospitalisations in New York, with some European countries planning to start easing their lockdowns with fatalities declining.

Total futures market volume fell by 9,206 to 44,848 lots. Data showed total open interest gained 656 to 188,501 contracts in the previous session.

Certificated cotton stocks deliverable as of April 8 totaled 28,394 480-lb bales, unchanged from 28,394 in the previous session.

For near to medium term, experts see strong resistance between 57-60 cents, while a strong support lies near 48-50 cents.

(Commodities Control Bureau)

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