REUTERS: Cotton jumps to near 1-month high

REUTERS: Cotton jumps to near 1-month high

ICE cotton futures surged as much as 5% to their highest in nearly a month on Wednesday, on expectations that top consumer China is going to purchase the natural fiber among other agricultural commodities from the United States.

The cotton contract for July rose 2.33 cent, or 4.37 %, at 55.64 cents per lb as of 12:06 p.m. EDT (1606 GMT).

Prices hit their highest since March 20 at 56 cents per lb earlier in the session.

“There is talk that China is going to issue new quotas to buy US cotton. Rumors have come mainly from grain merchants who have picked up that there is going to be corn, soybeans, sugar, soybeans oil and cotton bought," said Rogers Varner, president of Varner Brokerage in Cleveland, Mississippi.

“But these quotas stretch out almost 2 years so its something that has a long lifetime, and nobody knows if these quotas are going to be met but the initial reactions to this is positive."

The United States is one of the world's biggest producers of cotton.

Imports of US cotton were at 124,000 tonnes, up 43.5% in first quarter from last year, a customs data showed earlier this month.

The natural fiber have declined about 20% so far this year, as the world economy gets battered by the coronavirus pandemic, which has paralysed demand and locked many countries across the world.

The US House of Representatives will pass Congress' latest coronavirus aid bill on Thursday, House Speaker Nancy Pelosi said, paving the way for nearly $500 billion more in economic relief amid the pandemic.

“The overall trend of cotton market is in a no mans land because right now everyone is very unsure of what the demand is going to be," said Barry Bean, a cotton buyer based in Gideon, Missouri.

“The retail sector is closed, the mills have stopped operating except for PPE equipment, so everything is kind of on hold."

Investors are now awaiting the release of the US Department of Agriculture's weekly export sales data due on Thursday.

Total futures market volume rose by 2,206 to 30,698 lots. Data showed total open interest fell 1,604 to 179,858 contracts in the previous session.-Reuters


Source: Reuters
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