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ICE Cotton Jumps to More than 2 Year High on Weaker Dollar, Equities Rally

22 Jan 2021 8:56 am
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Mumbai (Commodities Control) – ICE cotton futures rose over 1% on Thursday to more than a two-year high on the back of a weaker dollar and a rally in global equities, while investors were looking forward to the U.S. weekly export sales report.

The cotton contract for Mar 21 Cotton closed at 82.57 cents, up 98 points. It traded within a range of 81.40 and 83.06 cents a lb. May 21 Cotton closed at 83.5 cents, up 100 points, Jul 21 Cotton closed at 84.3 cents, up 102 points and Dec 21 Cotton closed at 79.04 cents, up 109 points.

Heading into Friday’s trading session, spot March is 187 points up on the week and up 445 points on the month and year.

"The dollar is down a little bit, soybeans and corn are up, the stock markets are up a little bit, so cotton is following some other markets. There are expectations for really good sales (report) tomorrow," said Rogers Varner, president of Varner Brokerage in Cleveland.

The weekly export sales report from the United States Department of Agriculture (USDA) is due on Friday.

World stock markets racked up record highs, while the dollar fell to a one-week low on bets for massive stimulus from the U.S. President Joe Biden's administration. Currency traders believe stimulus on top of stimulus will only devalue the buying power of the U.S. dollar, thus exacerbating its downward trend.

Chicago soybeans snapped a three-session losing streak on Thursday, while corn prices firmed.

"There are huge expectations for a consumer boom once the COVID restrictions are taken off, and a lot of markets, especially cotton, are trying to price in robust demand for 2021," Varner added.

Cotton traders will also monitor the situation with China’s Xinjiang Province to see if there are any retaliations.

Total futures market volume fell by 7,554 to 28,013 lots.Certificated cotton stocks deliverable as of Jan. 20 totaled 70,649 480-lb bales, unchanged from the previous session.

Support and resistance for Cotton #2 lies at 80.68 cents and 84 cents per lb, respectively.





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