ICE cotton futures rose on Monday, hitting a more than eight-month high, supported by optimism ahead of the signing of a Phase 1 US-China trade deal.
Cotton contracts for March rose 0.21 cent, or 0.29%, to 71.52 cents per lb by 1303 p.m. EST (1803 GMT).
The March contracts rose to 71.96 cents earlier in the session, the level last seen on May 9.
“At the moment there is a lot of excitement about the Phase 1 signing coming on Wednesday … Assuming that nothing happens to knock it off track, then that'll bring stability to the market," said Barry Bean, a cotton buyer based in Gideon, Missouri.
The trade agreement marks the first step towards 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 are getting reports of increased export sales, consumption looks to be improving and trade looks to be improvising, so the market is rewarding that with a move upwards," Barry said, adding that the contract could gain another 3-4 cents on top of current prices.
Meanwhile, Myron Brilliant, executive vice president of the US Chamber of Commerce, remarked that while the Phase 1 deal “stops the bleeding", significant challenges remained to end the trade dispute between the two countries.
Traders also closely monitored winter storms in the United States that dumped snow, freezing rain and hail from Texas to Michigan.
Total futures market volume fell by 21,046 to 25,362 lots. Data showed total open interest gained 4,671 to 245,037 contracts in the previous session. * Certificated cotton stocks deliverable as of Jan. 8 totaled 6,824 480-lb bales, down from 8,890 in the previous session.
Source: Reuters