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ICE Cotton Closes The Week In Red; Worst Week In 4 Months

25 Jan 2020 8:09 am
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Mumbai (Commodities Control) – ICE cotton futures slipped on Friday as increased aversion to risk in financial markets spilled into commodities that overshadowed a strong weekly export sales report.

Cotton contracts for March fell 63 points to end at 69.4 cents per lb, trading within a range of 69.35 and 70.25 cents per lb. May 20 Cotton closed at 70.2, down 55 points. Jul 20 Cotton settled at 71.12, down 47 points.

The latest information indicates the Chinese government has isolated some 45 million people in several cities, the main one being Wuhan. In fact, the disease is now being called the Wuhan virus.

China has closed shopping malls, theme parks, and banned all public gatherings in those affected towns and cities. Fears of disruption of global air travel, resulting in a slow-down in commerce sent many financial and commodities market lower.

Crude oil prices fell along with U.S. stocks amid renewed concerns over the spreading of a coronavirus outbreak from China.

The U.S. Centers for Disease Control and Prevention confirmed a second U.S. case of the coronavirus in the country.

"Markets don't like uncertainty and until we know what the threat potential of this virus is, traders tend to tread more carefully," British merchant Plexus Cotton said in a research note.

However, USDA issued some friendly set of number in its delayed weekly exports-sales data. For the week ending 16th January cotton bookings were up 32.12% with the USDA reporting 307,764 RBs of sales.

The week’s sales were the highest since the week ending 7th November. In the same report, USDA listed exports at 282,590 RBs, a weekly reduction of 6.34% but an increase of 18.45% over the same week last year. MYTD cotton shipments are at 4.721m RBs, which is 16.57% more than last year at this time.

Traders and farmers are keeping a close eye on China's demand following the initial trade deal between the United States and China last week.

Cotton prices have risen about 25% since they touched a more than three-year low in late August last year on anticipation of China buying more U.S. agricultural goods as part the trade deal.

Total futures market volume fell by 13,437 to 20,357 lots. Data showed total open interest fell 1,043 to 259,961 contracts in the previous session.

Certificated cotton stocks deliverable as of Jan.23 totaled 6,792 480-lb bales, unchanged from 6,792 in the previous session.

Support and resistance for cotton #2 lies at 68.77 cents and 70.57 cents per lb, respectively.

(Commodities Control Bureau)

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