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ICE Cotton Scales over 8 –Month Peak as Rains Delay Harvest; Posts Second Straight Weekly Gain

17 Oct 2020 9:20 am
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Mumbai (Commodities Control) – ICE cotton futures jumped to their highest in more than eight months on Friday, as the dollar weakened and rains in major growing regions delayed harvest of the natural fiber. For the week, March futures jumped 3.13% higher; second consecutive weekly gain.

The cotton contract for December closed at 69.92 cents, up 70 points. March 21 Cotton closed at 70.56 cents, up 63 points. May 21 Cotton closed at 71.23 cents, up 58 points and July 21 Cotton closed at 71.71 cents, up 50 points.

"We had modest scattered showers yesterday in the Delta region, which probably has slowed the harvest a little bit; everyday you're not harvesting, you're loosing some yield," said John Bondurant, a trader in Memphis, Tennessee.

A jump in September's U.S. retail sales, with receipts at clothing stores rising 11%, was also providing support, Bondurant said, although sales remained well below their pre-pandemic levels.

The dollar fell 0.2% against rivals.

"With a friendly technical picture, a struggling U.S. dollar, strong grain and oilseed markets and mills caught on the wrong foot with their sizeable unfixed on-call position, it becomes increasingly difficult to make a bearish case," British merchant Plexus Cotton said in a note on Thursday.

The market largely ignored relatively poor weekly export sales data, with net sales down 45% from the previous week for the period ending Oct. 1. USDA reported 98,870 RBs of upland cotton sold in the week ending 8th october. That was 48% below the same week last year. Exports of 192,621 RBs brought the MY total to 2.505m RBs through the first 10 weeks of the MY.

Meanwhile, reports that China has ordered cotton mills to stop buying Australian supplies, could help the U.S. cotton market a bit, said Rogers Varner, president of Varner Brokerage in Cleveland.

Meanwhile, CFTC released their weekly Commitment of Traders report. It showed a 6,862 contract increase to managed money’s net long at 59,942 Contracts, as of 13th October.

Certificated cotton stocks deliverable as of Oct. 15 totaled 25,973 480-lb bales, up from 24,457 in the previous session.

Support and Resistance for Cotton #2 for March’21 lies at 69.39 cents and 71.31 cents per lb, respectively.

(Commodities Control Bureau)

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