NEW YORK: ICE cotton futures fell on Wednesday as the US dollar rose to a near two-month peak as a resurgence in new coronavirus cases in Europe increased fears about the global economic recovery.
Cotton contracts for December fell 0.39 cent, or 0.6%, to 65.15 cents per lb, at 2:29 p.m. EDT (1829 GMT), trading within a range of 64.8 and 65.46. “The dollar is stronger and that is because of the relapse of COVID-19 (cases) in Europe and Great Britain. The UK just announced that they are going to basically shutdown until next March and that is scaring the currency traders,” said Keith Brown, principal at cotton brokers Keith Brown and Co in Georgia.
The dollar rose to its highest since July 27 earlier in the session. In a bid to tackle the surging number of new cases in Britain, Prime Minister Boris Johnson told people to work from home where possible and ordered restaurants and bars to close early, with new restrictions lasting probably six months.
“Uncertainty (in the market) causes people to bail out ... the dollar is stronger but it is still a long way from where it was and so it is closer to the bottom than to the top,” said Sid Love, commodity trading adviser at Kansas-based Sid Love Consulting.
Concerns regarding cotton and apparel demand due to the virus have pushed prices down by about 7% so far this year.
However, “there is a fear that the crop may be smaller now than when last reported due to Hurricane Sally and Tropical Storm Beta,” Brown said.
The natural fibre had scaled its highest since late February, at 66.93 cents, in the previous week on crop damage concerns due to Hurricane Sally.
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