An exchange traded note that follows cotton futures rallied Monday after India banned all exports of the commodity.
The iPath Dow Jones-UBS Cotton ETN (NYSEArca: BAL) was up 6% at last check.
It is the second time in two years that the world’s second-largest producer of cotton has banned exports, and the move is “set to squeeze global supplies and push international prices higher,” the Financial Times reported.
“The decision to ban exports took into account the trend of domestic consumption and depletion of domestic availability,” the government said.
“India’s export ban is going to direct demand back to the U.S. and that is going to help to put a floor on how low prices can go this year,” said Abah Ofon, analyst at Standard Chartered Bank, in a Reuters report.
The cotton ETN was down 5% year to date heading into Monday’s trading. The note is relatively small in terms of assets with a market cap of about $41 million, according to Barclays, the issuer.
iPath Dow Jones-UBS Cotton ETN
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