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ICE Cotton Slips on Mounting Virus Cases

27 Jun 2020 8:26 am
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Mumbai (Commodities Control) – ICE cotton futures fell on Friday as concerns of a resurgence of the coronavirus outbreak soured market sentiment and cast doubts over demand for the natural fiber.

Cotton contracts for December settled at 20 points lower at 59.50 cents per lb. It traded within a range of 59.26 and 59.85 cents a lb. The contract was down about 0.5% so far this week.

July Cotton closed at 60.55 cents, down 126 points. October Cotton closed at 60.26 cents, down 13 points and March ‘21 Cotton closed at 60.16 cents, down 16 points.

The cotton market ended its last full week of trading for the month of June lower on miserable volume. For the week, the December contract was off 31 points. At one time this week it was 200 points higher. Of course, the new crop is waiting to see how USDA will peg 2020 acres next Tuesday when it releases its Planted Acreage data. As it stands, the top industry average guess is 13.10 million acres, give or take.

"It's down because of the economy - more infections and worry about lockdowns, slowing economic activity and cotton consumption worldwide is awful," said John Bondurant, a trader in Memphis, Tennessee.

U.S. Vice President Mike Pence said on Friday that 16 states saw a rise in cases of the novel coronavirus and called on Americans to embrace social distancing to minimize the spread of the disease.

Demand for cotton and apparel has been hammered by worldwide coronavirus restrictions, sending prices of the natural fiber tumbling 16% so far this year.

Market participants also kept a close watch on the Sino-U.S. trade developments after a report that U.S. intervention in Chinese interests could risk the Phase 1 trade deal.

"There's a lack of trading as there's no clear direction to the market and nobody wants to go short at these kind of (price) levels," said Sid Love, commodity trading adviser at Kansas-based Sid Love Consulting.

Investors are awaiting the U.S. Department of Agriculture's acreage report on Tuesday. A poll shows analysts estimate 13.153 million acres of U.S. 2020 cotton plantings.

Total futures market volume fell by 4,869 to 6,989 lots. Data showed total open interest fell 52 to 158,929 contracts in the previous session.

Certificated cotton stocks deliverable as of June 25 totaled 38,302 480-lb bales, down from 39,261 in the previous session.

Support and Resistance for cotton #2 lies at 58.95 cents and 60.13 cents per lb, respectively.

(Commodities Control Bureau)

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