REUTERS: Cotton drops to 1-1/2 month low on firm dollar, weakness in equities
REUTERS: Cotton drops to 1-1/2 month low on firm dollar, weakness in equities

REUTERS: Cotton drops to 1-1/2 month low on firm dollar, weakness in equities

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NEW YORK: ICE cotton futures fell as much as 3% to a 1-1/2 month low on Monday as a dip in equity market and a stronger dollar weighed on investors’ sentiment towards the natural fiber.

The cotton contract for December fell 2.66 cents, or 2.88%, to 89.67 cents per lb by 11:18 a.m. ET (1518 GMT), its lowest since Aug. 3.

“The Evergrande situation in China is weighing on the market sentiment and the dollar has firmed up. We are seeing some selling in the commodities,” said Jack Scoville, vice president at Chicago-based Price Futures Group.

“The demand for cotton is pretty good, but we are definitely on a downtrend at the movement.”

Sentiment in wider financial markets remained weak as troubles at property group China Evergrande sparked concerns about spillover risks to the economy.

The dollar rose 0.1% to a near one-month high against its rivals, potentially limiting demand for the natural fiber by making it more expensive for buyers holding other currencies.

“A dip below the 90 cents level, could trigger stop and fresh selling and such could push prices significantly lower today,” Louis Rose, director of research and analytics at Tennessee-based Rose Commodity Group, said in a note.

“A finish today below 90.00 is likely bearish.”

Total futures market volume rose by 12,353 to 31,503 lots. Data showed total open interest gained 41 to 272,703 contracts in the previous session.

Certificated cotton stocks deliverable as of Sept. 15 totaled 63,515 480-lb bales, down from 64,455 in the previous session.


Source: Reuters

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