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ICE Cotton Settles Lower on Improving Weather Conditions

1 Aug 2020 8:48 am
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Mumbai (Commodities Control) – ICE cotton futures fell from an over one-week peak on Friday, as favorable weather conditions in major cotton growing regions in the United States reduced fears of crop damage, but the contract still ended the week and month higher.

Cotton contracts for December settled down 0.52 cent, or 0.8%, at 62.66 cents per lb, having earlier hit their highest since July 22 at 63.31. October Cotton closed at 62.3 cents, down 52 points.March 21 Cotton closed at 63.25 cents, down 56 points and May 21 Cotton closed at 63.72 cents, down 74 points.

"The weather has turned favorable for the cotton growing regions in the U.S. and the hurricane (Hanna) got some good rains after the heat-wave that raised crop damage concerns," said Stephen Platt at Archer Financial Services.

Temperatures in the west Texas area will be near normal on Friday with a chance of thunderstorms, the National Weather Service said in its daily bulletin.

Severe hot and dry conditions in Texas, the biggest cotton producing state in the U.S., had stoked fears of crop loss leading the contract to gain 1.9% this month - its second straight monthly gain.

The contract also posted its best week in four, gaining over 4% this week, supported by concerns of crop damage in some parts of Texas where hurricane Hanna made landfall last weekend.

Cotton prices have declined 11% so far this year on the back of the demand destruction caused by the pandemic, forcing global central banks to inject stimulus to help ailing economies.

"We'll see cotton moving up and down with the tone of the headlines that come out related to the pandemic but ultimately it will break the range once the effects of all these stimulus come to vision," Platt said.

Total futures market volume fell by 1,388 to 18,347 lots. Data showed total open interest gained 778 to 174,760 contracts in the previous session.

Support and Resistance for cotton #2 lies at 61.24 cents and 64.02 cents per lb, respectively.

(Commodities Control Bureau)

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