NEW YORK: Cotton prices climbed to a 2-1/2-year peak on Tuesday, as robust demand and expectations of a reduction in production supported the natural fibre. The cotton contract for March settled up 0.85 cent, or about 1%, at 88.12 cents per lb, at 2:39 p.m. EST, having touched its highest since August 2018 at 88.90 cents earlier.
“The sentiment is bullish,” said Jack Scoville, vice president at Chicago-based Price Futures Group, adding that export demand has been very strong and there are increased expectations for a decrease in production.
In its weekly export sales report last Thursday the US Department of Agriculture showed that exports of 433,600 running bales (RB)- a marketing-year high - were up 36% from the previous week, of which 143,200 RB were shipped to China.
The agency had left its US cotton production estimate for 2020/2021 at 14.95 million bales in its monthly World Agriculture Supply and Demand Estimates.
Speculators increased their net long position by 12,867 contracts for a total bullish bet of 70,157 contracts in the week to Feb. 9, data from the US Commodity Futures Trading Commission showed. Meanwhile, US stock indexes hit all-time highs on optimism surrounding a $1.9 trillion US coronavirus relief package and hopes of an economic recovery.
Total futures market volume fell by 3,865 to 46,151 lots. Certificated cotton stocks deliverable as of Feb. 12 totalled 100,326 480-lb bales, up from 98,378 in the previous session.