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ICE Cotton Ends Higher On Hopes Of Improved China Buys

16 May 2020 8:33 am
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Mumbai (Commodities Control) - The cotton market managed to settle on a positive note on Friday. Cotton futures ended with 13 to 49 point gains on Friday.

July Cotton closed at 58.25 cents, up 40 points. For the week, July futures cotton was 192 points higher. October Cotton closed at 57.95 cents, up 49 points and December Cotton closed at 58.17 cents, up 41 points.

USDA reported strong weekly export sales, although sales were below the previous couple of weeks. China was a buyer once again.

Experts see the world starting to slowly recover from the Coronavirus scare and some stores are starting to open again after being closed for weeks. The hope is that consumer demand for Cotton products will quickly return, but this is not likely to be the case. Consumers have really been hurt economically due to stay at home orders imposed here and overseas and it will take some time for them to recover.

It is interesting to note that the cotton market did roll to negative price levels, but managed to return positive by closing session. The news of record bearish retails sales and the Trump Administration’s banning the Chinese technology giant Huawei from using U.S. software and certain semiconductor processes were two key bearish events for Friday’s trade, yet the market was able to slough them off.

USDA’s Cotton and Wool Outlook report suggests a 2% decline YoY in cotton production, while milling use is expected to increase 7% yr/yr (to a 3-yr high). The report stated exports will maintain an 85% of the use of new crop production, and U.S. will maintain a 37.5% share of the global export market.

CFTC data showed that managed money was 15,008 contracts net short on May 12. Cotton spec traders have been net short for 10 consecutive weeks.

Support and Resistance for cotton #2 lies at 56.64 cents and 59.66 cents, respectively.

(Commodities Control Bureau)


       
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