ICE cotton futures rose on Tuesday, rebounding from the previous day's losses, supported by bargain hunting and strength in grain markets, while traders awaited a U.S. monthly supply-demand report.
* Cotton contracts for March (CTH6) rose 0.1 cent, or 0.2%, to 64.73 cents per lb at 11:22 a.m. ET (16:21 GMT). The contract fell 0.7% to $64.27 on Monday.
* "There's bargain hunting going on in this market. It does appear to be oversold but I don't think there's much more upside potential here right now until we get some more concrete news on buys out of China," said Bob Haberkorn, senior market strategist at RJO Futures, a StoneX company.
* In late October, as part of a trade truce between the U.S. and China, Beijing agreed to expand farm trade with Washington but did not specify the scale and timing of the purchases.
* Since then, China has begun purchasing U.S. soybeans, wheat and sorghum, though uncertainty persists about whether it will meet the 12 million metric ton soybean purchase target cited by some U.S. officials by the year-end.
* Adding support, Chicago soybean futures ticked up, steadying after a day-earlier drop, as traders continued to assess the pace of Chinese purchases following the trade truce.
* "I could see cotton trying to retest back down south of 64 cents here... this one looks like it's going to be hanging out sideways to lower into the end of the year," Haberkorn added.
* Markets are now looking forward to the U.S. Department of Agriculture's World Agricultural Supply and Demand Estimates (WASDE) report, due on December 9.
* "There’s plenty of upside if a macro or fundamental catalyst kicks this market into gear," analysts at Peak Trading Research said in a note.
* "Cotton is one of the most consistent 'Santa Rally' markets. This is the time of year when a cheap market like this often pushes higher."