Cotton futures gain 2 percent on demand optimism from China

ICE cotton futures rose 2% on Tuesday on optimism that US cotton would see robust demand from China in the backdrop of progressing trade talks with the United States.

The most-active cotton contract on ICE Futures US, July settled up 1.45 cent, or 1.90 percent, at 77.94 cents per lb, its biggest one-day percentage gain since mid-March.

Prices traded within a range of 76.49 and 78.22 cents a lb, having dropped to 76.3 cents per lb in the previous session, a level last seen on March 20.

"(US-China trade negotiations) have been given less consideration, especially now that China is buying US cotton even though the trade war has not been resolved. It's telling the market that they need cotton," said Tom Christiansen, principal at Foresight Brokerage.

China's state planner said on Friday it approved a cotton sliding tariff import quota of 800,000 tonnes for 2019. The United States is the world's biggest cotton exporter, while China is the top consumer.

US Treasury Secretary Steven Mnuchin raised hopes last week that an end to the long-drawn trade war between the world's two biggest economies was near, saying he hoped talks were approaching a final lap.

"Sales pace is hitting much higher than what is needed to hit government's USDA numbers. If that continues, we can push the old crop through 80 cents," Christiansen said.

Total futures market volume fell by 15,811 to 43,401 lots. Data showed total open interest fell 1,766 to 214,899 contracts in the previous session.

Certificated cotton stocks deliverable as of April 12 totaled 53,421 480-lb bales, up from 52,952 in the previous session.