NEW YORK: ICE cotton futures dipped more than 1% on Friday, as index funds rolled over their positions from the front-month contract, precipitating a pullback from a more than two-year peak. The cotton contract for March fell 1.06 cents, or 1.3%, to 83.22 cents per lb by 12:55 p.m. EST (1755 GMT), having jumped to its highest since August 2018 at 84.89 cents earlier in the session.
The contract is up more than 3% so far this week, its biggest weekly percentage gain since mid-December.
“(Thursday’s) rally was really aggressive, it pushed the market from its comfortable trading range, so we are seeing a bit of pullback. There’s also some profit taking,” said Bailey Thomen, cotton risk management associate with StoneX Group.
“The Goldman Sachs index fund has started their rolling period, so some of the activity is selling pressure from that. However, fundamentals still remain good and we see steady demand for cotton continuing.”
Cotton prices jumped 4% on Thursday as investors banked on a bullish supply-demand outlook from the US Department of Agriculture (USDA).
The USDA is scheduled to release its monthly World Agricultural Supply and Demand Estimates (WASDE) report on Feb. 9.
Investors were also keeping close watch for developments on the US fiscal stimulus measures.
The US Senate on early Friday passed a budget plan that would allow for passage of President Joe Biden’s $1.9 trillion COVID-19 relief package in coming weeks without Republican support. Total futures market volume fell by 48,721 to 51,959 lots. Certificated cotton stocks deliverable as of Feb. 3 totalled 87,839 480-lb bales, up from 81,879 in the previous session.
Comments
Comments are closed.