ICE cotton futures fell over 1% on Monday as investors awaited further details on Chinese demand following reports the country was looking to boost stockpiles of the natural fiber in the face of rising virus-driven uncertainties.
The cotton contract for July fell 0.79 cent, or 1.42 %, at 54.84 cents per lb as of 2:01 p.m. EDT (1801 GMT). It traded within a range of 54.6 and 56.48 cents a lb.
Prices on Thursday jumped to an over one-month high on reports that China plans to add about 1 million tonnes of US cotton amongst other crops to its state reserves to help protect itself from supply chain disruptions caused by the coronavirus.
“The market has moved higher on short-covering on technical conditions and rumors that China will buy, possibly, more than 4.5 million bales of US cotton," said Louis Rose, director of research and analytics at Tennessee-based Rose Commodity Group.
“But short-covering rallies are tenuous and the market is moving somewhat lower until evidence of China's rumored buying emerges."
China is one of the world's biggest consumers of the natural fiber and the United States the biggest exporter.
Speculators reduced their short position on ICE cotton futures by 1,478 contracts to 14,198 contracts in the week to April 21, according to the US Commodity Futures Trading Commission (CFTC) report on Friday.
Meanwhile, a weekly export sales report by the United States Department of Agriculture (USDA) last week showed net sales of 15,700 running bales for 2019/2020.
Net sales included 26,000 RB from Vietnam and 6,800 RB from Pakistan, regular buyers of cotton in recent months.
“Exports will remain a major issue. … We should expect Vietnam, Pakistan, China and Turkey to be major delivery points (for cotton exports) for the remainder of the year," Mississippi State University professor emeritus O.A. Cleveland said in a note on Friday. “Bangladesh will also be a strong taker of US cotton, but its textile economy has suffered a bit more that some others'."
Investors now await a cotton planting progress report due later in the day.
Certificated cotton stocks deliverable as of April 24 totaled 3,962 480-lb bales, unchanged from 3,962 in the previous session.-Reuters