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ICE Cotton Ends At Decade’s Low Tracking Weaker Equities, Fears Of Demand Slowdown

21 Mar 2020 8:52 am
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Mumbai (Commodities Control) – ICE cotton futures hit their lowest level in more than a decade on Friday, as slowing business activities across the globe due to the coronavirus pandemic heightened fears of sluggish demand for the natural fiber.

Cotton contracts for May fell 130 points to 53.63 cents per lb. It traded within a range of 53.20 and 56.35 cents a lb.

July Cotton closed at 53.75 cents, down 123 points. October Cotton closed at 56.42 cents, up 17 points and December Cotton closed at 55.12 cents, down 98 points.

The contract has fallen 11.3% this week, registering its worst weekly fall since July 2011. The contract ended negative, despite excellent export sales. Concern about demand for cotton goods is an issue along with weak stock market.

"The market is not able to find any support right now... People are expecting to see export sales go down in the coming days as there is less demand due to global shutdown of industries," said Bailey Thomen, cotton risk management associate with INTL FCStone.

In U.S. alone the novel coronavirus has killed 200 people and over 14,600 cases had been confirmed by Friday.

The S&P 500 and the Dow dipped in choppy trading, as the State of New York ordered all non-essential workers to stay home to curtail the spread of the virus.

According to economists, the global economy is already in a recession as the hit to economic activity from the coronavirus pandemic has become more widespread.

Total cotton futures market volume fell by 13,394 to 44,860 lots.

"Demand destruction is real... While there is also going to be some reduction in planted acreage, we don't see production dropping nearly as much as demand," British merchant Plexus Cotton said in a research note.

Certificated cotton stocks deliverable as of March 19 totaled 41,404 480-lb bales, down from 41,580 in the previous session.

USDA planting intentions will be issued next week on March 31.

Support and Resistance for Cotton #2 lies at 51.26 cents and 57.56 cents/lb, respectively.

(Commodities Control Bureau)

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