ICE cotton futures rose over 1% on Tuesday, after the United States announced a delay in tariffs on some Chinese products, including textiles, while a dry weather spell in West Texas supported prices. The most-active cotton contract on ICE Futures US, the second-month December contract, rose 0.86 cent, or 1.48%, at 59.00 cents per lb at 1:30 pm EDT (1738 GMT). Prices rose as much as 3% to a high of 59.94 cents a lb.
"Today's rally is really just a result of the announcement that they (US) are going to be delaying some tariffs on some Chinese products until December and that would include some apparel products that would help cotton specifically," said Bailey Thomen, cotton risk management associate with INTL FCStone. The Trump administration on Tuesday delayed imposing a 10% import tariff on laptops, cell phones, video game consoles and a wide range of other products made in China, an abrupt pull-back.
The United States is one of the biggest producers of the natural fibre, while China is the largest consumer. US President Donald Trump appeared hopeful that China would change its stance on purchasing US agricultural farm products after the announcement of delay in tariffs. On Monday, the US Department of Agriculture (USDA), in its monthly World Agriculture Supply and Demand Estimates (WASDE) report, projected higher global ending stocks for the marketing year 2019/20 at 82.45 million bales.
China's cotton consumption estimate for 2018/19 was lowered to 8.25 million tonnes, and its imports estimate reduced to 2.05 million tonnes. The drawn-out trade war between Beijing and Washington has led to a nearly 20% fall in cotton prices so far this year. Prices had fallen to 57.26 cents last week, the fibre's lowest since March 2016. Total futures market volume rose by 5,514 to 27,664 lots. Data showed total open interest gained 2,087 to 214,487 contracts in the previous session.
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