DTN Cotton Open: Sharply Down on Virus

The cotton market is sharply lower Monday morning as the coronavirus is making its way across the world. South Korea, Iran, Egypt, and Italy have all reported new infections, and some countries they are spiking.

This move has triggered a massive sell-off in the global financial and commodities markets. As of Monday morning’s writing (5:30 a.m. central), the Dow Jones has plunged some 800 points lower, which scared cotton to trade nearly limit-down.

The huge break in cotton is doing damage to its charts. As of Monday morning, the prior February low of 67.30 cents has been negated. Additionally, certain technical indicators, such as the moving average, are unquestionably hooking bearish.

Such action could cause the current net long speculators to become disappointed with their holdings, causing them to liquidate those bullish positions and forcing the market lower still over the next few days.

There were 240 deliveries tendered against the spot March contract. Term Commodities was the issuer, with SG Americas and BNP Corporation stopping the notices. Given the negative events of the day, more deliveries Monday night are likely.

President Trump is in India today for a scheduled overnight official visit with Prime Minster Modi.

For Monday, support for May cotton will be 65.98 cents, limit-down, and then perhaps Tuesday’s 65.12 cents, May cotton’s low from last December 12. Overnight estimated volume as of 5:15 am is 20,650 contracts

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