NEW YORK: Cotton prices on Thursday climbed over 2% to their highest level since April 2019, propelled by a strong weekly exports sales report and hopes for more US economic stimulus and its likely fillip to demand for the natural fibre.
The cotton contract for March was up 1.59 cent, or 2.1%, at 77.24 cents per lb by 11:56 a.m. EST (1656 GMT). It traded within a range of 75.51 and 77.34 cents per lb.
“There’s a lot of enthusiasm in the market, a lot of optimism, especially surrounding new stimulus bill in the US,” said Bailey Thomen, cotton risk management associate with StoneX Group.
“Another factor contributing is that the export sales were really strong once again. We might be seeing a little bit of shortage if we continue to have this much demand,” she added.
The US Department of Agriculture’s weekly export sales report showed net sales of 402,900 running bales for 2020/2021, up 4% from the previous week and 44% from the prior four-week average.
Sentiment in the wider financial markets remained upbeat as investors lapped up risky assets on hopes of a US fiscal stimulus and the Federal Reserve’s pledge to keep pumping cash into markets.
US congressional negotiators were “closing in on” a $900 billion COVID-19 aid bill expected to include $600-$700 stimulus checks to individuals, lawmakers said on Wednesday.
Further helping cotton, the dollar index fell to its lowest in over 2-1/2 years against its rivals, making the natural fibre less expensive for holders of other currencies.
Total futures market volume rose by 1,530 to 20,819 lots.
Certificated cotton stocks deliverable as of Dec. 15 totaled 86,125 480-lb bales, unchanged from 86,125 in the previous session.—Reuters