Cotton futures rose for the first time in six sessions on Monday, climbing 1 percent, supported by buying on worries of crop damage in China, amid a weaker dollar. "Continued showers and rain across the eastern provinces of China have reportedly damaged this season's production potential," Louis Rose, an independent cotton trader and consultant with Risk Analytics in Memphis, Tennessee, said in a note.
There is a growing concern in China about the country's ability to deliver cotton for the auctions, which are supposed to start early March, said Jim Lambert, director of sales at Capstone Merchant Services. "We have heard that quality inspection is not catching up." China will begin its annual cotton sales from state reserves on March 6, 2017, and offer 30,000 tonnes of cotton per day, with auctions continuing until end of August, according to the National Development and Reform Commission.
This year, Beijing began to sell off its huge stocks of cotton, accumulated after years of stockpiling aimed at supporting farmers. The March cotton contract on ICE Futures US settled up 0.77 cent, or 1.08 percent, at 72.02 cents per lb. It traded within a range of 70.76 and 72.3 cents a lb. Total futures market volume rose by 3,261 to 15,180 lots. Data showed total open interest gained 668 to 253,666 contracts in the previous session. China cotton futures on the Zhengzhou Commodity Exchange were up 1.84 percent to 16,080 yuan per tonne. The dollar index was down 0.22 percent.
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