Cotton futures hover near two-week high on hot weather, strong sales data

ICE cotton futures edged up on Friday, hitting a two-week peak, helped by hot weather in major cotton growing regions in the United States and strong export sales data, with the natural fiber battling demand woes. The most-active cotton contract on ICE Futures US, the second-month December contract, rose 0.44 cent, or 0.74 %, at 60.06 cents per lb at 12:53 pm EDT. It earlier rose to 60.18 cents a lb, its highest since Aug. 2.

"Dry and hot weather in Texas, good export sales data are driving the prices," said John Bondurant, a trader in Memphis, Tennessee. "It was surprising to see such a huge demand from Bangladesh. It is mostly the low prices that is driving the demand from there a little bit." The weekly USDA export sales report showed net sales of 329,100 running bales (RB) for 2019-2020 marketing year, primarily to Bangladesh and Vietnam.

Temperatures in Houston hit 100 degrees Fahrenheit (38 Celsius) or more every day from Aug. 7-15 but were expected to ease to a near normal 96 F on Friday, according to AccuWeather. The contract had touched a 3-1/2 year low on Aug. 5 due to fears of increasing trade tensions between the United States and China.

Cotton has fallen about 19% so far this year as prolonged US-China trade war hurt demand for the natural fibre. China is the world's top consumer of the fibre, while the United States one of the biggest producers. Total futures market volume fell by 8,312 to 11,679 lots. Data showed total open interest gained 521 to 215,266 contracts in the previous session. Certificated cotton stocks deliverable as of August 15 totalled 23,732 480-lb bales, down from 23,820 in the previous session.