Cotton futures are finding support today after the Int’l Cotton Advisory Committee announced an expectation for Chinese cotton stocks to fall to a five-year low once the government auctions off its sizable reserves. Cotton futures are down 70 points today currently trading at .6208 per pound at the Intercontinental Exchange in New York.
The Chinese government made this decision reportedly because of falling domestic production brought on by declining Chinese demand, and a sharp decline in imports. The Int’l Cotton Advisory Committee says they expect Chinese inventory to drop by 7% this fiscal year, and another 10% next fiscal year.
“China had been holding and hoarding cotton in an effort to fix global prices and this is said to have been weighing on global markets,” said Danielle Bourbeau, a commodity broker for Capital Trading Group in Chicago, sharing her fundamental assessment of the cotton futures market. Bourbeau added, “This massive dump of inventory should shake-up the cotton (futures) market pretty good.”
Cotton futures trend is up with the market looking as if its finding resistance at 4th quarter 2015 previous highs. Cotton futures may be adjusting for this forthcoming cotton auction in China.
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