ICE Cotton Settles Lower as Speculators Liquidate ahead of Thanksgiving

Mumbai (Commodities Control) – ICE cotton futures extended losses for the second straight session on Wednesday as speculators liquidated positions ahead of the U.S. Thanksgiving holiday amid harvest progress and favorable weather conditions.

The cotton contract for March 21 Cotton closed at 72.41 cents, down 57 points after falling more than 1% in the previous session. May 21 Cotton closed at 73.29 cents, down 54 points and July 21 Cotton closed at 73.91 cents, down 56 points.

"Some of the speculators are liquidating long positions ahead of the holiday and month-end," said Jack Scoville, vice president at Chicago-based Price Futures Group.

"The harvest is coming up well and the weather is also good, so there are not much factors to lift the cotton market higher at the movement."

The weekly crop progress report from the U.S. Department of Agriculture (USDA) on Monday showed 77% of U.S. cotton was harvested, compared with 69% last week.

Earlier this month, the USDA in its monthly World Agriculture Supply and Demand Estimates (WASDE) report raised its projections for 2020/21 U.S. cotton production marginally to 17.1 million bales.

Sentiment in the wider financial markets remained subdued as a surprise rise in U.S. weekly jobless claims added to signs the recovery of the labor market was stalling amid a surge in COVID-19 infections.

Most U.S. markets will be closed on Thursday for the Thanksgiving holiday. On Friday, the cotton market will open late at 8 a.m. EST (1300 GMT) and close early at 1:30 p.m. EST (1830 GMT).

Total futures market volume fell by 17,762 to 8,931 lots.Certificated cotton stocks deliverable as of Nov. 24 totaled 121,109 480-lb bales, up from 119,220 in the previous session.

Into next week, the market will enter a new trading month. It was December 2019 when the cotton market enjoyed a huge upside run, topping at 74.00 cents, as traders were dialing in the potential effects of the U.S./China phase-one deal. Since that time, the market has everything from COVID to the shuttering of the U.S. economy, and the elections.

As the market enters the last Friday of November, March cotton stands down 60 points on the week, but up 258 monthly, and plus 156 on the year. Spot December remains in delivery until its expiration on Dec. 8.

Support and resistance for Cotton #2 lies at 71.75 cents and 73.45 cents per lb, respectively.