MUMBAI (Commoditiesontrol) – Cotton prices on the Intercontinental Exchange ended up marginally last week after see-sawing through the week amid uncertainties over the US-China trade deal as officials of these countries made contradictory remarks. Expectations of a huge cotton crop also checked a sharp rise in prices.
The most active December cotton contract ended up 0.6% at 60.90 cents per lb. Volumes in the December contract was at 13,759 compared with 11,629 a week ago. The March 2020 contract ended up 0.8% to 61.63 cents per lb.
Prices started on a positive note at the beginning of last week on comments by US President Donald Trump that China was said to be buying US agricultural products.
Treasury Secretary Steven Mnuchin also cleared the air over China cancelling the scheduled farm visits the previous week, saying it was done at the behest of the US. The previous week, prices had dropped after Chinese deputy level officials cancelled their farm visits in the US and were said to have wrapped their meetings earlier than expected.
However, on Tuesday, Trump rebuked China at the UN General Assembly for its unfair trade practices, sending prices lower.
“Not only has China declined to adopt promised reforms, it has embraced an economic model dependent on massive market barriers, heavy state subsidies, currency manipulation, product dumping, forced technology transfers and the theft of intellectual property and also trade secrets on a grand scale,” Trump said.
Trump also said he would not accept a “bad deal” with China.
“The American people are absolutely committed to restoring balance in our relationship with China. Hopefully, we can reach an agreement that will be beneficial for both countries…as I have made very clear, I will not accept a bad deal.”
The US Department of Agriculture’s weekly crop progress report also added to the brief weakness as it showed that harvesting in the 15 states were on track, building expectations of a huge crop this year.
As on September 22 the 15 states had harvested 11% of the crop compared with 16% a year ago. Compared with the previous week, harvesting was up 2%. Meanwhile, the “good” rating of the crop was at 32% compared with 34% a week ago. The “fair” and the excellent rating remained constant at 42% and 7% respectively.
Mid-week, sentiment picked up ahead of the weekly export sales and after Trump told reporters that the trade deal could happen “sooner”-than-expectations. He reiterated that China was indeed buying agricultural commodities from the US, especially beef and pork.
The weekly export sales data showed a healthy pick-up in sales for the week ended September 19. Data showed net sales for 2019-20 rose 83% on week to 155,200 RB with China’s increases being reported at 14,400 RB. For 2020-2021, net sales stood at 12,800 RB, compared with 19,300 RB a week ago. Exports were at 175,900 RB, up 6% on week. Net sales of the high-grade Pima cotton totalled 10,300 RB, down 35% on week, but up 62% from the prior 4-week average.
Despite demand from China and better performance on overall exports, prices remained subdued on views of a bumper cotton crop this year.
By the end of the week, prices inched up on short-covering and ahead of the US-China trade meeting scheduled in October. Earlier this week, Mnuchin had said trade talks between US officials, including him and US Trade Representative Robert Lighthizer, and Chinese Vice Premier Liu He trade could resume in two weeks.
Friday, news reports suggesting that the Donald Trump administration is said to be considering a plan to stop Chinese companies from listing in US exchanges, turned trade cautious.
Meanwhile, State Councillor and Foreign Minister Wang Yi on Friday told the UN General Assembly that trade barriers will plunge the world into a recession.
Data released by the US Commodities Futures Trading Com mission data for the week to September 24 showed managed money traders added net short positions by 348 contracts increasing total net short positions marginally to 25,238 contracts. Open interest for the week stood at 306,186 contracts, up 4,696 on week.
On Monday, traders will eye the weekly crop progress report for cues on the health of the crop and the harvesting status. A healthy number could lead to some weakness. However, traders are likely to exercise caution ahead of the trade meeting and avoid taking large positions amid uncertainties.
The December contract is seen moving in the 59.07-61.91 cent range this week.
(Commoditiescontrol Bureau)
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