REUTERS: Cotton eases off four-week high on dollar strength
REUTERS: Cotton eases off four-week high on dollar strength

REUTERS: Cotton eases off four-week high on dollar strength

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NEW YORK: ICE cotton futures retreated on Tuesday in thin year-end trading from a four-week peak hit in the previous session, as a strong US dollar made the natural fiber more expensive for other currency holders.

The cotton contract for March was down 0.84 cents, or 0.8%, at 111.44 cents per lb by 11:09 a.m. ET (1609 GMT). Prices had on Monday risen to their highest level since Nov. 29 at 112.69 cents.

“We are seeing a little bit of market correction after yesterday’s rally. The dollar is a little higher, so that could be adding a little bit of pressure,” said Bailey Thomen, cotton risk management associate at StoneX Group.

“We’re seeing still a relatively light volume trading overall as a lot of traders are still absent from the market in this holiday week. However, demand for US cotton continues to be pretty robust.”

The dollar index, which measures the currency against six major rivals, rose 0.2% on expectations the Federal Reserve could raise interest rates as early as March to counter rising inflation.

Last week, the US Department of Agriculture’s weekly export sales report showed net sales of 243,900 running bales for 2021/2022, with China being the top buyer.

Speculators cut net long positions in cotton futures by 9 contracts to 69,204 in the week to Dec. 21, data from the Commodity Futures Trading Commission showed on Monday.

The S&P 500 hovered around record highs on Tuesday as conviction in the US economy helped investors shrug off concerns over Omicron-driven travel disruptions and store closures. Oil prices also extended gains.

Total futures market volume fell by 9,986 to 7,573 lots. Data showed total open interest gained 933 to 234,366 contracts in the previous session.


Source: Reuters

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