Forexpros – Cotton futures were up for a third day on Wednesday, trading close to the previous session’s three-week high amid indications fiber demand from top consumer China will remain strong in the near-term.
On the ICE Futures U.S. Exchange, cotton futures for December delivery traded at USD1.0405 a pound during European afternoon trade, jumping 1.38%.
It earlier rose by as much as 1.89% to trade at USD1.0434 a pound, the highest price since October 31.
The U.S. Department of Agriculture said that U.S. farmers sold 996,100 bales of cotton to Chinese merchants last week.
This is the largest weekly purchase of U.S. cotton by Chinese importers since October 2003 and amounts to nearly 9% of estimated U.S. cotton exports in the 2011-12 marketing season.
Commenting on the large purchase, Phlip Bogel, Chairman of the American Cotton Shippers Association, said, “I think the business was done for the national reserves. I was surprised this large of a sale came out.”
Cotton traders have been focusing on prospects for increased Chinese demand in recent weeks after the country started a cotton stockpile in early September to protect domestic farmers’ interests.
According to government data, China imported 252,300 tonnes of cotton in October, a 163% jump from the same period last year, as lower prices boosted purchases.
Chinese industry group Cotlook estimated that cotton imports by China could reach 300,000 tonnes each month in November and December.
Meanwhile, commodity traders continued to eye developments surrounding the euro zone’s sovereign debt crisis.
Italian government borrowing costs eased back below the 7% threshold, a level widely viewed as unsustainable in the long term, while Spanish yields also declined amid speculation the European Central Bank was purchasing bonds in the secondary market.
However, worries over potential debt contagion in core euro zone economies continued to weigh on commodities, with investors eyeing Spanish and French bond auctions scheduled to take place later Wednesday and on Thursday.
Elsewhere, on the ICE Futures Exchange, coffee futures for December delivery fell 0.67% to trade at USD 2.4013 a pound, while sugar futures for March delivery slipped 0.22% to trade at USD0.2466 a pound.
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