Cotton futures inch higher on firm technical outlook

ICE cotton futures edged higher on Wednesday as the technical picture for prices improved, supported by optimism from progressing US-China trade talks.

The most-active cotton contract on ICE Futures US, July, settled up 0.4 cent, or 0.51 percent, at 78.96 cents per lb.

"Prices are trading in a range. It finds support at the bottom and goes back up," said Jim Nunn, owner of Tennessee cotton brokerage Nunn Cotton, adding that the market is testing the 200-day moving average around 80.02 cents.

Cotton prices traded within a range of 78.1 to 79.25 cents a lb during the session.

Prices were trading above key technical levels including the 100-day moving average. Speculators who trade on technical signals regard a break above the 100-day moving average as a bullish sign.

When prices break above 80 cents, it will pull prices higher like a magnet on speculative buying, boosted by US-China trade talks and export numbers on Thursday, if good, Nunn said.

The USDA will release its weekly export sales report on Thursday.

Markets are hopeful that an end to the long-drawn trade war between the United States and China was near, after the US Treasury Secretary said he hoped talks were approaching a final lap.

"Optimism regarding US-China trade talks and poor weather conditions have given a lift to most agricultural prices this year," analysts from Capital Economics said in a research note.

Total futures market volume fell by 8,666 to 36,847 lots. Data showed total open interest fell 2,390 to 212,509 contracts in the previous session.

Certificated cotton stocks deliverable as of April 16 totaled 55,517 480-lb bales, up from 53,421 in the previous session.