NEW YORK: Cotton futures eased on Tuesday as falling equities and crude oil prices due to rising coronavirus cases stoked demand worries for the natural fiber, while a softer dollar limited some losses.
The cotton contract for March fell 0.25 cent, or 0.4%, to 71.33 cents per lb by 12:20 p.m. ET (1720 GMT), having jumped as much as 2.3% in the last session on hopes for a coronavirus vaccine.
“Crude oil is down, stock market is down so the financial markets are definitely not helping out. The virus is having an effect, hurting demand for cotton - less people are buying cloths,” said Jack Scoville, vice president at Chicago-based Price Futures Group.
Rising virus infections in the United States and around the globe have pushed oil prices and Wall Street’s main indexes lower, with the S&P 500 and the Dow retreating from record closing highs hit a day earlier.
Falling oil prices make synthetic fibers cheaper, making cotton, a competing natural fiber, less appealing.
Cotton prices fell to a multi-year low in April as restrictions due to the virus, which has infected over 54 million people worldwide, weighed on cotton and apparel demand.
The ongoing harvest is also putting some pressure on the market with the weather looking favorable for the last 30% of the harvest, Scoville said, adding the lower dollar was limiting some losses.
The dollar fell to a one-week low against key rivals.
The US Department of Agriculture’s weekly crop progress data on Monday showed 69% of cotton harvested as of the week ended Nov. 15, compared to 61% in the preceding week.
Total futures market volume fell by 19,280 to 22,668 lots.
Certificated cotton stocks deliverable as of Nov. 16 totaled 107,126 480-lb bales, up from 100,182 in the previous session.—Reuters