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ICE Cotton Ends In Red; All Eyes On ‘Phase-1’ Deal

15 Jan 2020 7:46 am
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Mumbai (Commodities Control) – The cotton market spent Tuesday’s session waffling between positive and negative levels, as last moment anxieties gripped the trade. Wednesday, at a White House ceremony, the world’s top two economies will sign the phase one trade treaty. However, traders’ fears will unlikely abate until they see the video of the actual signing.

ICE Cotton contracts for March closed at 71.38, down15 points. It traded within a range of 70.9 cents and 71.75 cents a lb. May 20 cotton settled at 72.46 cents, down 21 points. While, July cotton ended at 73.36 cents, down 27 points.

There is an understanding that China will purchase massive amounts of U.S. goods and services. However, there is conflicting news that indicates, even after the signing, the U.S. will maintain its tariffs for a 90-day period for compliance reasons.

"We are basically waiting for the signing of the Phase 1 trade agreement with the Chinese, which has put the market on hold," said Jack Scoville, vice president at Chicago-based Price Futures Group.

On Monday, U.S. Trade Representative Robert Lighthizer said the translation of the Phase 1 trade agreement had almost been completed and more details would be made public on Wednesday.

The trade agreement marks the first step toward ending an 18-month-long trade dispute between the world's two largest economies, which resulted in cotton falling more than 4% in 2019.

"We still don't know what the Chinese are going to be doing agriculture-wise and that has got the market in a fix right now," Scoville said.

The U.S. Treasury Department also delisted China as a currency manipulator before the signing of the Phase 1 deal, which caused the yuan to rise to its highest level since July.

Total futures market volume fell by 10,772 to 23,397 lots. Data showed total open interest gained 2,693 to 247,730 contracts in the previous session.

Certificated cotton stocks deliverable as of Jan.13 totaled 6,824 480-lb bales, unchanged from 6,824 in the previous session.

On the technical side, "ICE futures should experience resistance near 72–73 cents and then in 100-point intervals up to 75–76 cents, basis March, over the near-to-medium-term," Louis Rose, director of research and analytics at Tennessee-based Rose Commodity Group, said in a note.

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