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Weekly ICE cotton: Ends Up; US-China Trade, WASDE Data Eyed On Thursday

7 Oct 2019 7:21 am
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MUMBAI (Commoditiesontrol) – Cotton prices on the Intercontinental Exchange ended up last week amid rising hopes of a positive outcome from the US-China trade talks scheduled on Thursday.

The most active December cotton contract ended up 1.3% at 61.67 cents per lb. Volumes in the December contract stood at 11,576 compared with 13,759 a week ago. The March 2020 contract also ended up 1.3% to 62.42 cents per lb.

Initially during the week, prices eased in reaction to the healthy harvesting data released by the US Department of Agriculture.

As on September 29, the 15 cotton-growing states had already harvested 16% of the crop compared with 11% the previous week. Harvesting was at 19% a year ago. The “good” rating of the crops stood at 34% from 32% a week ago. The “excellent” rating was at 6% from 7% a week ago. The “fair” rating of the crop was at 40% from 42% the previous week. With harvesting picking, it has led to expectations of a larger crop in the US this year.

However, prices soon recovered after White House trade adviser Peter Navarro told news channels that reports of the US considering delisting Chinese companies from US stock exchanges were “fake news.” The previous week some news reports suggested the US administration was considering delisting Chinese companies from US bourses which had dented prices.

By the middle of the week, the slight pick-up in export sales also helped sentiment. The USDA’s weekly export sales data for the week ended September 26 showed 2019-20 net sales at 177,800 RB, up 15% from the previous week and 49% from the prior 4-week average. However, for 2020-2021, net sales were at 7,500 RB, lower compared with 12,800 RB a week ago. Exports of 154,700 RB were down 12% from the previous week. Primary destinations were Vietnam (38,700 RB), Mexico (21,800 RB), Bangladesh (18,200 RB), Turkey (11,600 RB), and China (10,700 RB). Net sales of the high-grade Pima cotton fell 63% on week to 3,800 RB.

Friday, positive comments by US President Donald Trump on the much-awaited US-China trade this week kept prices elevated.

“I view China as somebody we’re trying to make a deal with, we have a very good chance of making a deal with,” Trump said. Right now, we’re in a very important stage in terms of possibly making a deal. If we make it, it will be the biggest trade deal ever made,” Trump told reporters.

Data released by the US Commodities Futures Trading Commission data for the week to October 1 showed managed money traders reduced their net short positions by 443 contracts narrowing total net short positions marginally to 24,798 contracts. Open interest for the week stood at 307,291, up 1,104 on week.

This week, prices are likely to take cues from the weekly harvest data that will be released on Monday and the weekly export sales on Thursday.

Thursday, the US-China meeting will also be under scrutiny for comments and developments on trade ties between the two countries.

The World Agricultural Supply and Demand Estimates for the month of October, also to be released on Thursday, will give cues to the market.

The support and the resistance for the December contract are seen at 61.20 cents and 62.16 cents respectively.

(Commoditiescontrol Bureau)

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