Cotton stays up on technicals, renewed US-China trade hopes
ICE cotton futures rose more than 1% on Wednesday after falling for four straight sessions on technical buying, while report suggesting progress on the US-China trade talks rekindled some optimism for a breakthrough.
Cotton contracts for March rose 0.80 cent, 1.25%, to 64.85 cents per lb by 02:19 p.m. ET.
It traded within a range of 64.05 and 64.85 cents a lb.
“It is a technical move because it held yesterday’s lows around 64 cents and holding that they kind of produced extreme reaction on the upside,” said Jack Scoville, vice president at Chicago-based Price Futures Group. The contract fell to its lowest since Nov. 22 at 64.02 cents in the previous session after US President Donald Trump said a trade agreement with China might have to wait until after the US presidential election in November 2020.
Sentiments rebounded across markets as media reports fed hopes that the giant economies were moving closer to a phase-one trade deal.
Optimism for a trade deal buoyed the market, said Keith Brown, principal at cotton brokers Keith Brown and Co in Moultrie, Georgia, adding 62.40-63.70 cents are big support areas while resistance lies around 66-67.13 cents.
Investors await the release of the US Department of Agriculture’s (USDA) the weekly export sales data due on Thursday. Last week, USDA in its weekly export-sales report showed net sales of 281,500 running bales (RB) for the 2019/20 marketing year, up 24% from the previous week and up 33% from the prior four-week average, for the period ended Nov. 21.
Total futures market volume fell by 8,679 to 24,555 lots. Data showed total open interest fell 267 to 196,723 contracts in the previous session.