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ICE Cotton Drops Triple Digit Tracking Equities, India Lockdown; 3rd Weekly Decline

28 Mar 2020 8:29 am
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Mumbai (Commodities Control) – Cotton futures were down 112 to 155 points on Friday, as ICE cotton fell declined for third consecutive week. Markets grappled with the economic fallout from the coronavirus pandemic.

Cotton contract for May settled down 145 points at 51.33 cents per lb. It traded within a range of 51.15 and 53.32 cents a lb. The contract was down 3.4% for the week. July Cotton closed at 51.28 cents/lb, down 155 points. October Cotton ended at 53.34 cents, down 137 points and December Cotton closed at 53.49 cents, down 112 points.

"Cotton prices continue to fall in response to continued instability in financial markets, and demand destruction from the COVID-19 virus," said Barry Bean, a cotton buyer based in Gideon, Missouri.

"News of spot market shutdowns in India, port closures, and long term economic damage have simply added fuel to the fire."

India, Asia's third-largest economy, has imposed a nationwide lockdown since Wednesday to fight the coronavirus and contain its spread.

The novel coronavirus, which has killed at least killed 24,887 people and infected 551,823 globally, caused a halt in most economic activities worldwide.

The U.S. House of Representatives on Friday approved a $2.2 trillion aid package - the largest in American history - to help people and businesses cope with the economic downturn inflicted by the coronavirus pandemic.

However the commodity trade advisors say that the stimulus package will also take its own time to work and meanwhile the pressurized prices would affect the cotton acres.

Next week USDA will issue its planting intentions for 2020. The average industry estimate stands at 12.50 million acres.

Elsewhere, stocks across the globe fell on Friday after a historic three-day run-up, with markets expecting the volatility to continue as the virus has literally put a full stop on world economic activities.

Total futures market volume rose by 5,230 to 28,372 lots. Data showed total open interest fell 573 to 192,616 contracts in the previous session.

Support and Resistance lies at 49.76 cents and 54.10 cents/lb, respectively.

(Commodities Control Bureau)

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