Cotton prices edged lower after setting a record high Friday, as poor weather in several countries has left tight supplies even as demand grows stronger worldwide.
Cotton for December delivery fell 5 cents to settle at $1.0987 a pound after hitting a record $1.1980 a pound.
It was the highest level for cotton since cash prices paid to farmers during the Civil War when blockades prevented shipments from leaving the South, said Sharon Johnson, a senior cotton analyst at Penson/FCG.
"As long as I've been involved in this I've never seen anything like this," said Johnson, who has worked in the cotton market since the mid-1980s.
In the past three months, cotton has rallied from a low of 73.01 cents a pound after adverse weather in Pakistan, India and China delayed or reduced the size of crops there.
That has boosted U.S. cotton exports with farmers about one-third of the way through the current harvest. "We find ourselves with mills continuing to try and find cotton at any price," Johnson said.
Traders also have taken advantage of the dollar, which has grown weaker recently against other currencies. Since commodities like cotton and oil are priced in dollars, traders can buy more product by using foreign currencies.
Spencer Patton, founder and chief investment officer for hedge fund Steel Vine Investments LP, said he believes cotton's rally may be nearing its peak, in part because the dollar rebounded Friday.
The stronger dollar pressured most commodities.
In metals contracts for December, gold fell $5.60 to settle at $1,372 an ounce; silver dropped 14.7 cents to $24.288 an ounce and palladium dropped $12.35 to $589.20 an ounce. January platinum fell $17.20 to settle at $1,695.40 a pound.
December copper bucked the trend, adding 2.35 cents to settle at $3.8390 a pound.
Grains were mixed. Corn for December delivery fell 4.25 cents to settle at $5.63 a bushel. November soybeans gave up 3.25 cents to settle at $11.9575 a bushel and December wheat gained 3.75 cents to $7.0450 a bushel.
In energy contracts for November delivery, benchmark oil for November delivery fell $1.44 to settle at $81.25 per barrel; gasoline slipped 3.27 cents to $2.1038 a gallon; heating oil dropped 5.31 cents to settle at $2.2308 a gallon and natural gas lost 12.2 cents to settle at $3.535 per 1,000 cubic feet.
