ICE cotton futures were little changed on Wednesday as concerns over the dent in demand from US-China tensions countered support from unfavorable weather for the natural fiber crop in Texas. The cotton contracts for July settled up 0.11 cent, or 0.2%, at 58.34 cents per lb.
“Even though the trade war tensions are mounting, China is buying US cotton as a part of fulfillment of the phase 1 deal, but we are not sure whether it will be shipped or not if it aggravates more,” said Ed Jernigan, Chief Executive of Jernigan Global, a cotton textile supply chain manager.
The lack of rain, however, was supporting cotton, he added. Major cotton growing areas in the United States are going through a dry spell, posing a threat to cotton crops.
Meanwhile, the tensions between the United States and China made investors cautious, hurting overall market sentiment and somewhat tempering hopes of an economic recovery as countries eased coronavirus restrictions.
Donald Trump, US President Donald Trump said on Tuesday that the United States was working on a strong response to China’s planned national security legislation for Hong Kong.
US is the largest exporter of cotton and China its biggest consumer.
Further weighing on US cotton, was the possibility of rising supply in the world market from India, at more competitive prices driven by a record slide in the rupee.
“Indian cotton is the cheapest in the world right now and if China did not have the phase 1 deal with US, they would have bought it from India,” Jernigan said. The total futures market volume fell by 2,513 to 19,149 lots.
Data showed total open interest gained 1,456 to 184,741 contracts in the previous session.
