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ICE Cotton Settles Past 60 Cents On Short Covering, Dry Weather

2 Jun 2020 8:05 am
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Mumbai (Commodities Control) – ICE cotton futures rose on Monday to their highest in more than two months, as investors covered shorts, while dry weather in Texas, the largest cotton-producing state, provided further support.

Experts say the feeling that the worst of the coronavirus pandemic may be behind us and new hopes of additional domestic and export demand over the next few weeks could be the reason for Monday’s gains.

Cotton contracts for July closed 247 points higher at 60.06 cents per lb. Prices hit their highest since March 13 at 60.39 cents. October Cotton closed at 58.57 cents, up 130 points. December Cotton closed at 58.71 cents, up 123 points and March Cotton closed at 59.24 cents, up 76 points.

"The cotton contract was down quite a bit last week and investors are covering shorts at this time," said Jack Scoville, vice president at Chicago-based Price Futures Group, adding that dry weather in west Texas is supporting prices as well.

On Friday, prices had dropped to a near three-week low over U.S. - China tensions.

Major Cotton growing regions in the U.S., especially Texas, is going through a dry spell which may hurt production.

"The contract was heavily oversold last week," said Barry Bean, a cotton buyer based in Gideon, Missouri.

Speculators trimmed their net short position in cotton futures by 347 contracts to 6,917 in the week to May 26, data showed on Friday.

However, "with the recent tussle between U.S. and China around the situation in Hong Kong has taken things a little far and China being our biggest consumer, it doesn't really look good for cotton'" Price Futures Group's Scoville said.

China said on Monday U.S. attempts to harm Chinese interests will be met with firm countermeasures, criticizing a U.S. decision to begin ending special treatment for Hong Kong as well as actions against Chinese students and companies.

U.S. is the biggest exporter of cotton, while China its largest consumer.

Total futures market volume rose by 8,845 to 37,434 lots. Data showed total open interest gained 3,929 to 192,454 contracts in the previous session.

Support and Resistance for cotton #2 lies at 56.11 cents and 62.37 cents per lb, respectively.

(Commodities Control Bureau)

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