Cotton jumps two percent on tighter supplies in India, China crop worries

By admin       2016-11-18

Cotton futures jumped nearly two percent on Wednesday, the biggest one-day percentage gain in over a month, on tightening of supply in India and concerns of crop damage due to adverse weather in China. "The shortage of cash flow in the rural areas of India is keeping the supply of cotton tight. And, India is a major exporter," said Louis Rose, an independent cotton trader and consultant with Risk Analytics in Memphis.The upward movement is likely being sustained by a lack of certificated stocks against the ICE exchange." Indian Prime Minister Narendra Modi last week announced withdrawal of large denomination banknotes from circulation, in a shock "demonetisation" drive to fight tax evasion, corruption and forgery.The sudden move has caused huge disruption to daily life, especially for poor people who live in the cash economy. The March cotton contract on ICE Futures US settled up 1.21 cent, or 1.72 percent, the biggest one-day percentage rise since October 12, at 71.69 cents per lb. It traded within a range of 70.12 and 71.78 cents a lb.Certificated cotton stocks deliverable as of November 15, 2016 totalled 47,559 480-lb bales, unchanged from 47,559 in the previous session. China cotton futures on the Zhengzhou Commodity Exchange were up 2.13 percent to 16,060 yuan per tonne. The market awaited the release of the US Department of Agriculture's weekly export sales report on Thursday.

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