NEW YORK: Cotton extended its rally to a more than 2 -1/2 year peak on Monday as investors bet that demand for the fibre would improve with global economic recovery and supply would tighten.
Cotton contracts for May rose 1.49 cent, or 1.7% at 91.97 cents per lb by 12:37 pm EST. It traded within a range of 90.83 and 92.3 cents a lb, which was its highest since early June, 2018.
“There’s been a lot of demand for cotton that’s holding up pretty good, ending stocks are going to be tightened and production could be lowered, so that’s adding a little bit of momentum,” said Bailey Thomen, cotton risk management associate with StoneX Group
Given strong prices for grains such as soybeans and corn, farmers might still plant fewer acres of cotton next marketing year even with prices at around 90 cents, further supporting cotton prices, she added. US soybean futures rose again on Monday after a US Department of Agriculture (USDA) forecast that US soy supplies will remain tight into 2022. Corn futures were also up.
Cotton prices, also took support from a weaker US dollar which lowered the cost of greenback-denominated cotton for buyers in other currencies. Speculators cut long positions in cotton futures by 477 contracts, but remained heavily long in the fibre with a total bullish bet of 69,680 contracts, the US Commodity Futures Trading Commission showed on Friday. Total futures market volume remained unchanged at 25,172 lots. Data showed total open interest also remained at 246,068 contracts in the previous session.
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