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ICE Cotton Rises on Strong Demand, Track Grains Market

26 Jan 2021 8:36 am
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Mumbai (Commodities Control) – Cotton prices rose on Monday as gains in the grains market and overall robust demand for the natural fiber overshadowed a strong U.S. dollar.
The cotton contract for Mar 21 Cotton closed at 82.33 cents, up 77 points and May 21 Cotton closed at 83.3 cents, up 64 points. Jul 21 Cotton closed at 84.14 cents, up 58 points and Dec 21 Cotton closed at 78.88, up 41 points.
"The market is at a pretty good position right now and (we) are seeing healthy demand across global markets for cotton and that is very positive. The grains markets are adding a little bit of positivity," said Bailey Thomen, cotton risk management associate with StoneX Group.
Chicago soybeans rose after the previous session's sharp price fall attracted bargain hunters, while wheat rose on good U.S. export prospects.
"(But cotton) is facing some intraday pressures from the dollar which is trading a little bit higher. However, the index funds are carrying pretty long positions ... if more stimulus money is injected down the road it is possible they would continue to be going long into commodities," Thomen said.
The U.S. dollar was up 0.1% against key rivals, making greenback denominated cotton costlier for investors holding other currencies.
The Federal Reserve meets this week and will announce its monetary policy on Wednesday. With that in mind, the Dollar Index was higher Monday, as slowing vaccinations and talk of a smaller COVID-19 relief package is causing the U.S. dollar to rally. It is generally accepted that a stronger dollar is an impediment to U.S. agricultural exports.
Meanwhile, speculators cut their long position in cotton by 1,357 contracts to 61,013 in the week to Jan. 19, data from the U.S. Commodity Futures Trading Commission showed on Friday.
Officials from the Biden administration tried to head off Republican concerns that the $1.9 trillion pandemic relief proposal was too expensive, though lawmakers from both parties agreed that getting the vaccine to Americans should be a priority.
Total futures market volume fell by 23,464 to 23,134 lots.Certificated cotton stocks deliverable as of Jan. 22 totaled 73,722 480-lb bales, up from 71,702 in the previous session.
USDA will report weekly export sales on Thursday. On a cumulative basis, sales for 2020-21 have reached 12.16 million bales versus last year’s same time amount of 11.86 million bales. Current season sales have reached 86% of the USDA’s forecast for the marketing year versus a five-year average of 73%.
Support and resistance for Cotton#2 lies at 81.73 and 82.70 cents per lb, respectively.

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