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Cotton prices inched higher on Thursday as upbeat export sales data reassured traders of robust demand for US cotton in the midst of a bitter US-China trade spat, while the dollar weakened slightly. Cotton contracts for July rose 0.73 cent, or 1.1%, to 67.48 cents per lb, as of 2:18 a.m. EDT (0618 GMT).

It traded within a range of 66.51 and 68.22 cents a lb. Earlier in the session, the US Department of Agriculture (USDA) reported net sales of 381,400 running bales (RB) for marketing year 2018/19 were up 68% from the previous week.

"The export data and inferences regarding export competitiveness of US cotton are the primary price drivers today," said Louis Rose, director of research and analytics at Tennessee-based Rose Commodity Group. Increase in export sales largely came for India (98,500 RB) as the world's biggest cotton producer saw a drop in production to the lowest level in nine years.

Also supporting cotton prices was a weaker dollar, Rogers Varner, president of Varner Brokerage in Cleveland, Mississippi, said. The US currency, in which cotton is priced, hit a two-year high earlier in the session but reversed course. Cotton prices could rise to 68-70 cents for the July contract, with the weather being the most crucial factor in determining the direction of prices, Varner added.

Meanwhile, concerns grew that the China-US trade conflict was fast turning into a technology cold war between the world's two largest economies. China fired a fresh salvo on Thursday, saying Washington needed to "correct" its "wrong actions," while Reuters reported on Wednesday that Washington was considering Huawei-like sanctions on Chinese video surveillance firm Hikvision.

Total futures market volume rose by 6,435 to 27,529 lots. Data showed total open interest gained 315 to 215,842 contracts in the previous session. Certificated cotton stocks deliverable as of May 22 totalled 80,317 480-lb bales, up from 77,278 in the previous session.

Copyright Reuters, 2019


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