ICE cotton futures jumped 2 percent to touch more than one-week high on Tuesday as investors covered their short positions, with progress on the US-China trade talks in focus. The most active cotton contract on ICE Futures US, the May contract, settled up 1.48 cents, or 2 percent, at 74.61 cents per lb.
The second-month contract hit its highest level since Feb. 22, at 74.70 cents. Ms Louis Rose, director of research and analytics at Tennessee-based Rose Commodity Group said, “Market is somewhat higher on additional spec short-covering, post yesterday’s loss. Cotton market is consolidating between 71.00-76.50 cents per lb, and this is likely to continue until a trade deal with China is reached and/or we have new fundamental news.”
US Secretary of State Mike Pompeo said President Donald Trump will reject any agreement that is not perfect, but added the United States will keep working on a deal. Meanwhile, a report over the weekend said Trump and his Chinese counterpart, Xi Jinping, could sign a formal trade pact at a summit around March 27.
“Traders are optimistic on the trade talks, but they will probably want to see something in writing and signed prior to sponsoring a rally,” Rose added. Total futures market volume rose by 2,641 to 29,480 lots. Data showed total open interest gained 1,139 to 224,385 contracts in the previous session. Certificated cotton stocks deliverable as of March 4 totalled 131,497 480-lb bales, down from 131,498 in the previous session.