Foreign news on May 4, Intercontinental Exchange (ICE) cotton futures fell to their lowest level in nearly two weeks on Monday due to market concerns that escalating trade tensions between China and the United States will hinder China’s demand for cotton.
ICE July cotton futures closed down 1.51 cents, or 2.7%, with a settlement price of 54.33 cents per pound, with a trading range of 53.85-55.8 cents. The former was the lowest since April 22.
Prices climbed to a one-and-a-half-month high last Thursday, aided by the U.S. Department of Agriculture’s (USDA) export sales report, which showed export sales of 422,378 bales of 2019/20 cotton to China, the highest level since June 2012. Maximum weekly purchasing volume during the market year.
Ed Jernigan, CEO of Jernigan Global, said: “The market has failed to rise due to sales to China because Sino-US relations are deteriorating rapidly, so some large sales are far away. The chance of being shipped out in the future is very low.”
Louis Rose, director of research and analysis at Rose Commodity Group in Tennessee, said in the report: “Large-scale purchases from China may depend on the situation between China and the United States on the coronavirus. The easing of tensions.”
“If China purchases more than 4 million bales of U.S. cotton for strategic reserves, it will dominate the trend of ICE cotton futures.”
Global restrictions and lockdowns caused by the new coronavirus epidemic have hit cotton and apparel demand, cotton prices are down 23% so far this year. Jernigan added: “No one knows what the bottom line is for apparel consumption because when (retail) stores reopen, they have record inventory of spring apparel to deal with, and they won’t be placing fall orders.”
A report released by the U.S. Commodity Futures Trading Commission (CFTC) on Friday showed that as of the week of April 28, speculators reduced their net short positions in ICE cotton futures and options by 2,712 lots to 11,485 lots.
The total trading volume of the cotton futures market fell by 3,126 lots to 20,268 lots. As of May 1, ICE’s deliverable No. 2 cotton futures contract inventory was 3,727 bales, which was the same as the previous trading day.
The U.S. Department of Agriculture (USDA) announced in its weekly crop growth report that as of the week of May 3, 2020, the U.S. cotton planting rate was 18%, compared with 13% the previous week and 16% in the same period last year. The annual average is 17%.
</p
