U.S. strong cotton export sales hit trader’s expectation and stoked worries over tight supplies in the world’s top exporter, resulting in ICE cotton rise for the third consecutive day on Thursday. U.S. exporters sold 479,700 running bales of upland cotton in the week ended Jan. 23, down slightly from the previous week’s report, which had shown the strongest sales since October.
The sales data were “very, very surprising” and “supportive” of the market, said Louis Rose, co-founder of Risk Analytics.
Many traders expected spot prices at near five-month highs would curtail demand.
Traders have said that tight supplies of high-quality U.S. cotton have been supporting prices in recent weeks.
The most-active March cotton contract on ICE Futures U.S. closed up 0.48 cent, or 0.6 percent, at 86.03 cents a lb.
With the string of gains, spot prices have recovered most of Monday’s losses, when prices fell the most since October as investors, worried about economic growth in emerging markets and waning demand, liquidated their positions.
The data eased worries over Chinese demand, expected to slow as Beijing looks to overhaul a government stockpiling program in the 2014/15 crop year that begins on Aug. 1.
China began the building state reserves in 2011, paying above global prices to support farmers and driving up import demand as the country’s inventories ballooned.
Even so, ICE inventories rose to 146,500 bales on Wednesday, up from about 34,100 at the start of the month to the highest since early December, the most recent exchange data compiled by Reuters showed.
The March contract saw technical strength as it opened near and then closed above its 14-day moving average of 85.60 cents and continued to trade well above other key levels, including the 200-day moving average of 83.71 cents. (Reporting by Chris Prentice)
Increases in sales were reported for several countries including Vietnam and top consumer China, the weekly U.S. Agriculture Department (USDA) report showed.
Courtesy: Reuters
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