NEW YORK: ICE cotton futures rose on Thursday as hopes that a swift economic rebound would spur demand for the natural fibre and concerns over dry weather in West Texas offset lower weekly exports.
Cotton contracts for July rose 0.28 cent, or 0.3% to 84.48 cents per lb by 1:19 pm EDT (1719 GMT). They traded within a range of 83.49 and 85.23 cents a lb.
“Export sales were terrible across the board... (but) they’re not going to be excellent every week and you’re still in line to have a pretty good year,” said Jon Marcus, president of Lakefront Futures and Options brokerage in Chicago.
The cotton market is likely at a point where it holds firm even in the wake of “sluggish” export sales though it is stalling awaiting fresh news to push it higher, Marcus said, adding prices could face resistance around 89 cents.
The US Department of Agriculture’s weekly export sales report showed net sales of 122,300 Running Bales for 2020/2021, down 55% from the previous week and 54% below the prior 4-week average.
“We do not have a lot of cotton in the US.. you’re going to see a much better export sales report next week,” said Louis Barbera, partner and analyst at VLM Commodities Ltd.
Barbera said that a lack of rain in West Texas, high crop abandonment in South Texas and a rally in soybeans and corn futures could result in lower US supplies and buoy July cotton futures to $1 before its expiry. Hopes for a fast economic recovery from the pandemic were bolstered by data that showed U.S retail sales rose by the most in 10 months in March and weekly initial jobless claims fell to its lowest level since mid-March 2020.