ICE cotton futures closed on Monday little-changed from last week when they posted four consecutive sessions of gains. Mounting pressure from weak grains markets were counteracted by support at key technical levels and buoyant equities markets. Cotton competes for growing space in the U.S. with corn and soybeans, reports Reuters.
ICE Futures U.S benchmark for the December cotton contract settled lower by 0.03 cent, or 0.05 percent, at 66.15 cents a pound after dropping near the key support level 65 cents.
Sharon Johnson, a cotton specialist with KCG Futures in Atlanta said, "We sold off initially because of the break in Chicago [markets] but came back on trade buying. It could be mills buying or gins covering their positions," according to Reuters.
On Friday, the U.S. government data released showed that speculators lowered a large bearish bet in cotton futures and options in the week ended Aug. 19
Meanwhile, China is currently unwinding its 10 million-ton cotton stockpile since late last year. This suggests that China's demand for cotton imports within the coming years is more than likely to decline. This has had a major impact on cotton prices in the U.S. and is one of the contributing factors to the 20 percent decline in U.S. cotton futures over the past year, according to The Wall Street Journal.
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