REUTERS: Cotton futures scale 1-1/2 years peak

REUTERS: Cotton futures scale 1-1/2 years peak

NEW YORK: ICE cotton futures climbed to a near 1-1/2 year peak on Wednesday, as the dollar faltered and demand improved for the natural fibre.

The cotton contract for December settled up 0.02 cent at 71.04 cents per lb. Prices of the front-month contract earlier hit its highest since May 9, 2019 at 72.13 cents.

There was some profit taking after cotton touched the highs, “but dollar has been weak, demand has been off the charts and cotton is just on a mission higher,” said Jon Marcus, president of Lakefront Futures and Options brokerage in Chicago.

Cotton prices had fallen below 50 cents in early April after the coronavirus pandemic hammered demand, but since then have risen over 40% as adverse weather stoked concerns of lower output.

“Everything corrected probably quicker than thought and countries are stockpiling after realizing prices are in favor now,” Marcus said, adding “to see this market move into the 80-90 cents range is not out of the question, especially if the USDA’s forecasts of the output do shrink.”

The US Department of Agriculture marginally lowered its US production estimate to 17.05 million bales in October, but market experts expect the final crop to be lower than that.

Investors now await the weekly export sales data due on Thursday. China plans to purchase around 500,000 tonnes of cotton from its Xinjiang region for state reserves following last month’s report that US was weighing a ban on cotton from Xinjiang and as China has ordered mills to stop buying Australian cotton. Certificated cotton stocks deliverable as of Oct. 20 totaled 31,818 480-lb bales, up from 29,464 in the previous session.


Source: Reuters
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