NEW YORK: ICE cotton futures scaled a new contract peak on Friday, as a strong US jobs report lent a further boost to a positive demand outlook and put prices on course for their best week since July.
Cotton contracts for December rose 0.81 cent, or 0.9% to 91.49 cents per lb by 1:50 p.m. EDT, having earlier hit a new contract high of 91.94. Cotton prices were also on track for their best week since early June, rising 2.4%.
The US nonfarm payrolls (NFP) report showed a 943,000 addition in jobs last month, exceeding expectations by economists polled by Reuters for a 870,000 increase. “There’s perceptions of very strong demand that got supported by the US employment data and those perceptions are likely to continue as there’s going to be a lot of pent-up demand for clothing with economies reopening,” said Jack Scoville, vice president at Chicago-based Price Futures Group. Scoville expects cotton prices to climb towards 95 cents, before retreating.
Adding further support to the natural fibre were the Dow and S&P 500 equity indexes hitting new record highs and gains across US grain markets which boosted sentiment. “As long as the outcome of the major Northern Hemisphere crops remains in limbo, cotton should remain well-supported, with the possibility to spike higher in case something were to go wrong on the weather front,” said Peter Egli, director of risk management at British merchant Plexus Cotton. Market participants now turn their attention to a monthly supply and demand report due next week.
Total futures market volume rose by 4,899 to 22,866 lots. Data showed total open interest gained 2,339 to 251,816 contracts in the previous session.
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