REUTERS: Cotton rises nearly 1pc on trade deal optimism
REUTERS: Cotton rises nearly 1pc on trade deal optimism

REUTERS: Cotton rises nearly 1pc on trade deal optimism

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Cotton futures gained nearly 1% on Wednesday as prospects of a “phase one" US-China trade deal boosted investor sentiment ahead of weekly federal export sales data from the US Department of Agriculture (USDA). Cotton contracts for March rose 0.50 cent, or 0.75%, at 66.94 cents per lb by 01:00 p.m. EST (1800 GMT).

It traded within a range of 66.25 and 67.18 cents a lb.

“What's driving prices today is still the promise of a deal with China," said Keith Brown, principal at cotton brokers Keith Brown and Co in Moultrie, Georgia.

“We've a verbal trade agreement but not a written one. In that verbal agreement they've promised to buy a massive amount of US commodities. So that's the underlying tone for the market."

The so-called Phase One trade deal has been “absolutely completed," a top White House adviser said on Monday, adding that US exports to China will double under the agreement.

The trade deal announced last week will be signed in early January, US trade negotiators said.

The United States is one of the world's biggest producers of the natural fiber, while China is the largest consumer.

Recent optimism around the trade talks has lifted cotton prices nearly 20% since touching a more than three-year low in late August. However, the natural fiber has declined more than 7% so far this year.

The USDA will release the weekly export sales report on Thursday.

Last week, the USDA in its weekly export-sales report showed net sales of 277,100 running bales (RB) for the 2019/20 marketing year, up 69% from the previous week and 9% from the prior four-week average, for the period ended Dec. 5.

Total futures market volume fell by 6,469 to 15,616 lots. Data showed total open interest gained 1,097 to 206,101 contracts in the previous session.

Source: Reuters

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