NEW YORK: ICE cotton futures fell for the fifth straight session on Tuesday as demand worries due to a new wave of virus infections in Europe and concerns around the US-China relations weighed on market sentiment.
Cotton contracts for May fell 0.78 cent, or 0.9%, to 83.84 cents per lb at 12:39 p.m. EDT (1639 GMT).
“The COVID outbreak, the third wave, in Europe has caused some orders to be postponed and canceled, so that has raised some concerns regarding demand,” said Ed Jernigan, chief executive of Jernigan Global, a cotton textile supply chain manager.
Also, “we have got a situation where some mills lost some confidence that prices are going to go higher,” he added.
Germany is extending its lockdown until April 18 and calling on citizens to stay at home for five days over the Easter holidays to try to break a third wave of the COVID-19 pandemic.
The United States and Chinese officials concluded on Friday what Washington called “tough and direct” talks in Alaska, which laid bare the depth of tensions between the world’s two largest economies.
The United States is the largest exporter of cotton, while China is the biggest consumer.
The dollar rose to a two-week peak against key rivals, making cotton costlier for buyers holding other currencies. On the technical front, “immediate downside pressure should be maintained while the contract remains below the 88.56/89.34” cents level, Commerzbank said in a note.
However, “we will retain our longer-term bullish stance while the price of cotton remains above the 79.39 (level),” the note added.
Total futures market volume fell by 5,120 to 12,000 lots. Data showed total open interest fell 1,350 to 229,286 contracts in the previous session.