International Exchange (ICE) cotton futures rose on Friday, supported by optimism that the China-U.S. trade deal is about to be signed, while the latest monthly supply and demand report showed that U.S. and global cotton production fell and inventories decreased, also enhancing market optimism. .
ICE March cotton futures contract closed up 0.62 cents, settling at 71.31 cents per pound. It rose to 71.39 cents during the session, the highest level since May 10. The trading range is between 70.35-71.39 cents.
Keith Brown, head of cotton brokerage Keith Brown and Co in Moultrie, said: “The USDA did not cut U.S. production as much as expected, but it lowered its global inventory forecast. Overall, the report showed Neutral to slightly positive.”
It said, “The bigger factor influencing the clear upward trend in the market is the trade agreement signed by the United States and China next week, and its impact will begin to exceed the crop report.”
In its monthly supply and demand report, the U.S. Department of Agriculture lowered its 2019/20 cotton production estimate to 20.1 million bales from last month’s estimate of 20.2 million bales, noting a decline in Texas production.
According to the report, global ending stocks for 2019/20 are estimated at 79.59 million bales, down from 80.32 million bales estimated last month, while U.S. ending stocks are estimated at 5.4 million bales, down from last month’s estimate for 5.5 million bales.
In terms of trade, China’s Ministry of Commerce spokesperson Gao Feng revealed at a regular press conference on the afternoon of the 9th that at the invitation of the United States, a member of the Political Bureau of the CPC Central Committee, Vice Premier of the State Council, and the Chinese side of the China-U.S. Comprehensive Economic Dialogue Leader Liu He will lead a delegation to visit Washington from the 13th to the 15th of this month to sign the first phase of the economic and trade agreement with the United States. The teams of both parties are in close communication on the specific arrangements for signing the agreement.
Optimism surrounding a trade deal has pushed cotton prices up more than 25% since they hit a more than three-year low in late August last year.
Louis Rose, director of research and analysis at Rose Commodity Group in Tennessee, said in the report, “The formal signing of the first phase agreement between China and the United States is good, but before China becomes an important buyer of U.S. cotton, this Much of the impact may have already been reflected in market prices.”
The export sales report released by the U.S. Department of Agriculture on Friday showed that in the week ending January 2, U.S. 2019/2020 upland cotton export sales The net increase was 152,000 bales, a decrease of 38% from the previous week and a decrease of 33% from the average of the previous four weeks. That week, U.S. upland cotton export sales for the 2020/2021 season increased by 5,500 bales. U.S. upland cotton exports were shipped with 211,400 bales, a decrease of 6% from the previous week and an increase of 2% from the four-week average. New sales of upland cotton in the United States in 2019/2020 were 218,400 bales, and new sales in 2020/2021 were 5,500 bales.
The total trading volume of cotton futures fell by 5,605 lots to 33,377 lots. Data show that positions increased by 4,500 lots on the previous trading day to 0.00 lots.
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