Cotton edges higher on hopes of upbeat WASDE report

Cotton futures rose on Monday ahead of the government's monthly supply and demand crop report, which investors expected to show declines in production and ending stock numbers, while a gain in the US stock markets provided further support.

Cotton contracts for March rose 0.13 cent, or 0.19%, at 67.88 cents per lb by 01:22 p.m. EST (1823 GMT).

It traded within a range of 67.62 and 68.36 cents a lb.

"People are fairly optimistic about the (WASDE) report," said Bailey Thomen, cotton risk management associate with INTL FCStone, adding that investors are interested in seeing the impact of the US-China Phase-1 trade agreement.

"Investors are hoping to see some increase in Chinese imports."

Cotton futures had climbed to a more than eight-month high of 71.96 cents per lb on Jan. 13, bolstered by optimism around the signing of a Phase 1 US-China trade deal.

The United States is the biggest exporter of the natural fiber, while China is the biggest consumer.

The United States Department of Agriculture's (USDA) monthly world agriculture supply and demand estimates (WASDE) report is due to be released on Tuesday at 12 p.m. EST (1700 GMT).

Cotton prices were also supported by gains in the stock markets, analysts said.

US stocks rose as a recent set of strong domestic economic data and largely upbeat fourth-quarter earnings eased worries about the impact of the coronavirus outbreak on global growth.

Traders would also keep a close on the National Cotton Council's survey report this week, said Keith Brown, principal at cotton brokers Keith Brown and Co in Moultrie, Georgia, adding, "if we see a 10% reduction in 2020 planted acres it might challenge the January high." Total futures market volume fell by 27,813 to 35,449 lots. Data showed total open interest fell 12,929 to 240,086 contracts in the previous session.

New York cotton

=================================================================================
                                  Current Session                       Prior Day
          Open     High    Low    Last     Time     Set     Chg     Vol       Set
=================================================================================
Mar'20   67.62    68.36   67.62   68.32   13:09      -      0.57   26726    67.75
                                          Feb 10
May'20   68.03    68.86   68.03   68.85   13:09      -      0.71   18326    68.14
                                          Feb 10
Jul'20   68.98    69.70   68.95   69.68   13:09      -      0.66    2989    69.02
                                          Feb 10
=================================================================================