REUTERS: Cotton inches up

REUTERS: Cotton inches up

ICE cotton futures edged higher on Tuesday on firmer stock markets and a weaker dollar, but demand concerns amid lockdowns to curb the spread of the coronavirus limited the natural fiber's gains.

The cotton contract for July rose 0.13 cent, or 0.24%, at 53.20 cents per lb by 2:17 pm EDT (1817 GMT). It traded within a range of 52.76 and 53.46 cents a lb.

“The stock markets are up pretty sharply and the dollar is down, so that is supportive here. It supports the idea of exports," said Jack Scoville, vice president at Chicago-based Price Futures Group.

Stock markets were propped up by hopes of coronavirus-induced lockdowns easing and better-than-expected Chinese trade data.

“Cotton demand is horrible and prices would be a lot lower if it were not for the Fed printing trillions of dollars to buy all kinds of debt instruments and is thereby flooding the system with liquidity, which is raising inflation expectations," said Peter Egli, director of risk management at British merchant Plexus Cotton.

Meanwhile the International Monetary Fund said the global economy is expected to shrink by 3.0% during 2020 in a coronavirus-driven collapse of activity.

“Overall downside pressure will prevail while no rise and daily chart close above the March 24 high at 54.50 is seen," Axel Rudolph, technical analyst at Commerzbank said in a note.

Total futures market volume fell by 6,766 to 37,445 lots. Data showed total open interest fell 415 to 183,662 contracts in the previous session.

US President Donald Trump said on Monday that his administration was close to completing a plan to reopen the US economy, which has been largely shut down to slow the spread of the novel coronavirus.

The dollar index fell 0.5% against a basket of six other major currencies. A weaker greenback makes commodities priced in dollars, such as cotton, less expensive for holders of other currencies.


Source: Reuters
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