NEW YORK: ICE cotton futures rose on Wednesday, aided by a rally in equity markets, as increased likelihood of additional economic stimulus measures from the Biden administration in the United States supported the natural fiber.
The cotton contract for March rose 0.35 cent, or 0.4%, to 81.50 cents per lb by 2:20 p.m. EST (1920 GMT). It traded within a range of 80.60 and 81.75 cents a lb.
“There are inflation expectations... The Biden administration is taking over and there might be more money printing to fund all the programs they want to push forward and the market is reacting to that,” said Peter Egli, director of risk management at British merchant Plexus Cotton.
“If you print more money your purchasing power diminishes which means nominal prices of assets are likely to go up.”
Joe Biden was sworn into office on Wednesday, with investors focused on his $1.9 trillion stimulus package proposal and the pace of COVID-19 vaccine distribution.
Expectations further increased after US Treasury Secretary nominee, Janet Yellen, urged lawmakers on Tuesday to “act big” on the next coronavirus relief package.
Total futures market volume fell by 1,480 to 31,147 lots. Certificated cotton stocks deliverable as of Jan. 19 totaled 70,649 480-lb bales, up from 68,631 in the previous session.—Reuters