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ICE Cotton Futures Settles Mixed On Liquidation, Up Move In Equities

8 Apr 2020 8:51 am
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Mumbai (Commodities Control) – Barring May contract, all ICE cotton futures settle higher on Tuesday. Active May cotton contract on ICE slips lower as investors liquidated their long positions, but gains in the stock market amid hopes of the novel coronavirus outbreak slowing limited the losses.

The cotton contract for May settled down 15 points at 52.9 cents per lb. It traded within a range of 52.36 and 53.58 cents a lb, hovering near an over one-week peak of 53.86 cents hit on Monday. July Cotton closed at 53.16 cents, up 8 points. October Cotton closed at 54.54 cents, up 46 points. December Cotton closed at 54.48, up 36 points.

There was some long liquidation but the strength in the stock market is helping stabilize cotton price, said Jack Scoville, vice president at Chicago-based Price Futures Group.

"Also the fact that we could be getting past the peak in the coronavirus is helping foster good feelings in the cotton market."

USDA’s Crop Progress report showed cotton was 7% planted in the 15 tracked states, compared to 5% from the same week last year. Texas (the largest production state) cotton progressed from 5% planted to 12% on April 05.

World stock markets posted sharp gains as signs of progress in curbing the outbreak in both Europe and the United States fueled investors' appetite for risk.

The virus has infected more than 1.3 million people and killed over 74,000 across the globe, and though the numbers are still rising, some tentative improvements have given hope.

New York state, the U.S. epicenter of the coronavirus, is nearing a plateau in number of patients hospitalized, Governor Andrew Cuomo.

But investors remained concerned as the pandemic has already caused supply chain disruptions and hurt global economies.

"With the Covid-19 situation also suppressing end-user consumer of fabric, it looks like the cotton market is set to face strong headwinds in second quarter," OCBC Bank said in a research note.

Total futures market volume fell by 11,798 to 53,438 lots. Data showed total open interest fell 4,270 to 187,845 contracts in the previous session.

Support and Resistance for Cotton #2 lies at 51.73 cents and 54.17 cents per lb, respectively.

(Commodities Control Bureau)

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