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Cotton futures going down

YarnsandFibers News Bureau 2019-07-05 11:45:00 –

Cotton futures fell on Tuesday, as mills held off buying following a short-lived rally during the previous session and investor liquidation and a stronger U.S. dollar pressured prices.

The most-active December cotton contract on ICE Futures U.S. edged down 0.82 cent, or 1 percent, to settle at 84.72 cents a lb.

A lack of buying from global textile mills and long liquidation from investors pushed cotton prices to the day’s losses, after they climbed 1.8 percent during the previous session as investors renewed investment in riskier assets at the start of the quarter.

“Mills are holding the line here,” said Sharon Johnson, a cotton specialist with Knight Futures.

Merchants remained concerned over demand from China, the world’s largest textile market, amid a potential credit crunch, though the country’s willingness to tighten monetary policy has so far prompted spinning mills to reduce purchases from government reserves, rather than imports, according to the International Cotton Advisory Committee.

A stronger U.S. dollar, with the dollar index gaining against a basket of currencies, added pressure as it makes cotton and other dollar-traded commodities more expensive to holders of other currencies.

Losses in U.S. financial markets also weighed on cotton, dealers said.

December cotton fell back after climbing near its 100-day moving average of 85.49 cents a lb.

Prices have been largely range bound between 83 cents a lb and 88 cents a lb in the quiet market, dealers said.

Volumes were light ahead of the U.S. Independence Day holiday on July 4, when the exchange will be closed.

Cotton trading will resume with a delayed opening at 8 a.m. EDT (1200 GMT) on Friday.

Courtesy: Reuters

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