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ICE cotton holds steady as dry weather concerns offset weak demand

Fri, 20th Sep 2019 19:05

Sept 20 (Reuters) - Cotton prices were little changed on Friday in low volume trade as tepid export sales and lack of demand from China were offset by dry weather concerns in the cotton belt in Texas. * Cotton contracts for December rose 0.02 cent, or 0.03%, to 60.35 cents per lb as of 01:50 p.m. EDT (1750 GMT). It traded within a range of 60.2 and 60.87 cents a lb.

* "It's a quite choppy session. The export sales were bad. We are not going to meet the target sales ... Also, Texas has got rains in the north but it's getting worse in the cotton growing regions. That won't help cotton during the harvest," said John Bondurant, a trader in Memphis, Tennessee.

* The United States Department of Agriculture's (USDA) crop progress report on Monday said 41% of U.S. cotton was in good to excellent condition, compared with 43% reported last week.

* Weekly data from the USDA on Thursday showed net sales of 85,000 running bales, up 14% from what was reported last week, but the report also showed reductions of about 39,000 from China.

* "The US cotton belt has experienced some unseasonably hot and dry conditions lately ... the U.S. crop is still a moving target in regards to size and quality and this is one of the reasons why we don’t think the trade is going to chase prices too much lower from here," British merchant Plexus Cotton said in a note.

* "Markets often retest support and resistance after a breakout and this could be the case here. If the market were to hold above 60 cents, we might see another wave of spec short covering that lifts the market back into the low-to-mid 60’s, where overhead trade selling is waiting."

* Prices have fallen nearly 18% so far this year on the backdrop of the protracted trade war between the United States and China, one the leading consumers of the natural fiber.

* China is the biggest consumer of cotton and the United States is the biggest exporter.

* Total futures market volume fell by 5,322 to 13,472 lots. Data showed total open interest gained 1,196 to 231,987 contracts in the previous session. (Reporting by Nallur Sethuraman and Diptendu Lahiri in Bengaluru; Editing by Tom Brown)

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