Cotton futures rise with Chinese purchases pacing US exports
Cotton futures climbed on signs of firm demand for supplies from the US, the world’s top exporter. Most soft commodities advanced as a weaker dollar boosted the appeal of assets priced in the greenback.
In the week ended Dec. 17, US export sales of upland cotton more than tripled from a year earlier, government data showed. China has boosted purchases to meet commitments under a trade deal, while its economy rebounds.
The US Department of Agriculture cut its forecast for the domestic crop several times after adverse weather, including drought and hurricanes, eroded supply prospects. Futures have jumped 57% from the lowest in a decade on April 1. A surge in soybean and corn prices signals cotton acreage may ebb next year, Peter Egli, a Chicago-based director for Plexus Cotton Ltd., said in a report.
“Export demand has held strong despite stay-at-home orders and weaker economies around the world,” Jack Scoville a vice president at Price Futures Group in Chicago, said in an email. “Traders now hope for even more demand later” as coronavirus vaccines are distributed and consumer demand recovers, he said.
Cotton for March delivery rose 1.3% to 75.79 cents a pound at 12:34 p.m. on ICE Futures US in New York. Last week, the price reached 77.41 cents, the highest for a most-active contract since April 2019.
Brazil, the second-largest exporter, faces a smaller harvest and higher domestic demand, while Pakistan, a major importer, is boosting purchases after a drop in production.
Raw sugar, arabica coffee and cocoa climbed in New York.