JULY 8, 2020
July 8 (Reuters) - ICE cotton futures rose to their highest level since early March on Wednesday, breaking above a key technical level, as concerns persisted over damage to the crop due to dry weather in major cotton producing states.
* Cotton contracts for December rose 0.86 cent, or 1.4%, to 63.88 cents per lb by 2:07 p.m. EDT (1807 GMT). Earlier in the session, the contract touched 64.33 cents, its highest level since March 5.
* “The continued dry weather in Texas and breaking of the 200-day moving average ... is moving the market higher today,” said Louis Barbera, partner and analyst at VLM Commodities LTD.
* “We are in the middle of the rebalance of the index funds and those are adding commodities due to weakness in dollar.”
* The dollar index fell half a percent, making commodities priced in the greenback, like cotton, cheaper for holders of other currencies.
* However, rising virus cases have weighed on demand for apparels, prompting the natural fiber to plunge about 10% so far this year.
* “With respect to demand, the cotton market remains on life support, with little relief in sight,” Louis Rose, director of research and analytics at Tennessee-based Rose Commodity Group, said in a note.
* The U.S. coronavirus outbreak crossed a grim milestone of over 3 million confirmed cases on Tuesday as more states reported record numbers of new infections.
* Investors now await the United States Department of Agriculture’s (USDA) weekly export sales report, due on Thursday.
* U.S. export sales and shipments are ahead of pace required to meet USDA target, according to Rose’s note.
* Total futures market volume fell by 4,228 to 16,060 lots. Data showed total open interest gained 759 to 168,486 contracts in the previous session. – Reuters (sOURCE: af.reuters.com)