REUTERS: Cotton futures slip to one-week low
REUTERS: Cotton futures slip to one-week low

REUTERS: Cotton futures slip to one-week low

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ICE cotton futures dropped to a one-week low on Monday, following a plunge in equities and an over 30% tumble in oil markets, on escalating fears over the economic fallout from the rapidly spreading coronavirus. Cotton contract for May fell 1.88 cent, or 3%, to 60.91 cents per lb as of 1:48 p.m. EDT (1748 GMT). It traded within a range of 60.79 and 62.5 cents a lb.

“What we're seeing is a wet blanket that's been thrown into the cotton market from the coronavirus and the impact that's having on the financial markets and across all the commodities," said Barry Bean, a cotton buyer based in Gideon, Missouri. Cotton prices have already declined more than 12% so far this year as the spread of the virus raised demand concerns for the natural fiber.

More than 111,600 people have been infected by the coronavirus across the world and over 3,800 have died, according to a Reuters tally of government announcements. Oil prices crashed on Monday, suffering their biggest daily rout since the 1991 Gulf War, sparked by the collapse of an OPEC+ supply agreement that now threatens to overwhelm the world with oil.

The slump in oil prices and heightened fears of a global recession due to the virus outbreak caused the benchmark S&P 500 index to tumble 7%, temporarily halting trading. The May contract earlier in the session slipped to its lowest since end-February at 60.18 cent per lb.

“We are seeing evidence and hearing directly from mills that are coming in buying here in the 60 to 61 cents range. So we are seeing support at that level," Bean added. Cotton speculators switched to a net short position of 3,489 contracts, cutting 11,675 in the week to March 3, Commodity Futures Trading Commission data showed on Friday.

Investors now await the United States Department of Agriculture's (USDA) World Supply and Demand Estimates (WASDE) report due on Tuesday. “At the world aggregate level, projected ending stocks are expected to expand more than 1 million bales, per an expected increase in the USDA's production estimate," said Louis Rose, director of research and analytics at Tennessee-based Rose Commodity Group in a note.

Total futures market volume rose by 7,167 to 37,978 lots. Data showed total open interest gained 2,184 to 210,451 contracts in the previous session. Certificated cotton stocks deliverable as of March 6 totaled 39,670 480-lb bales, down from 39,815 in the previous session.


Source: Reuters

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