Cotton future contract situation seems now very healthy

Cotton future contract situation seems now very healthy

In New York-traded cotton futures and options, hedge funds cut their net long by more than 11,000 lots to a three-month low below 550000 contracts – although may wish they hadn’t.

Futures have staged a 5 % rebound since this, helped by worries over damage to the US crops from Hurricane Matthew, a surprise cut by the USDA in Wednesday’s Wasde report to its estimate for domestic stocks, and by decent US export sales data on Friday too.

“The export sales report was a very healthy 226900 running bales which shows demand is still strong at slightly lower prices,” said traders at Ecom, noting that the figure was up 55 % from the prior four-week average.

“No doubt a positive indicator for the market was the fact that China led the charge with 58500 running bales a week, after the strategic reserve auction halted” at the end of last month – meaning the close of a string of sales from Beijing’s huge state inventories.

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