Cotton extends gains as vaccines brighten demand outlook
- The cotton contract for March was up 0.61 cent, or 0.8%, at 75.28 cents per lb.
- Demand has improved, but it always does at this time of year. However, the contract will likely struggle getting above 76 cents.
Cotton prices extended gains on Tuesday on hopes of a pickup in consumption as a nationwide COVID-19 vaccination kicked off, and as the natural fiber drew support from a recent bullish US demand and supply outlook.
The cotton contract for March was up 0.61 cent, or 0.8%, at 75.28 cents per lb at 12:31 p.m. EST (1731 GMT), its highest level since May 2019.
"The March contract has modest gains on optimism regarding the latest WASDE & export reports. US and worldwide COVID-19 vaccinations also are helping," said Louis Rose, director of research and analytics at Tennessee-based Rose Commodity Group.
Demand has improved, but it always does at this time of year. However, the contract will likely struggle getting above 76 cents, he added.
Last week, the US Department of Agriculture's World Agriculture Supply and Demand Estimates (WASDE) report showed lower US and world production and ending stocks estimates for the 2020/21 crop year.
The United States began vaccinating people on Monday as the country's COVID-19 death toll crossed the 300,000 mark. Britain and Canada have also begun to administer shots.
Positive news on vaccines, along with hopes of greater fiscal stimulus, have boosted investors' sentiment towards riskier assets, lifting US stock indexes to record highs.
Further helping cotton, the dollar index hovered around 2-1/2 year lows, making the natural fiber less expensive for holders of other currencies.
Total futures market volume fell by 9,205 to 12,782 lots.
Certificated cotton stocks deliverable as of Dec. 14 totaled 86,125 480-lb bales, unchanged from 86,125 in the previous session.
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