ICE cotton futures on Friday slipped from a seven-month high reached in the previous session as risk sentiment soured after a US strike killed top Iranian commander, but prices were still on track for a fifth consecutive weekly rise. The front-month March contract fell 0.33 cent, or 0.48%, at 68.94 cents per lb by 11:20 a.m. EST (1720 GMT).

Iran promised retaliation after a US air strike in Baghdad on Friday killed Qassem Soleimani, Tehran's most prominent military commander, ratcheting up tensions in the Middle East.

“The tensions in Middle East seems to be the main thing that has put a damper on a lot of the commodity markets today. Other grains and stocks are down as well," said Bailey Thomen, cotton risk management associate with INTL FCStone. Oil prices surged as much as $3 a barrel and safe-haven gold, yen and bonds all rallied after the overnight attack. The front-month cotton contract had risen to its highest level since early June in the last session.

For the week, prices are up about 1.4%, on track for their fifth consecutive weekly gain, mainly supported by signs of a breakthrough in the US China trade relations. US President Donald Trump earlier this week said that Phase 1 of trade deal with China would be signed on Jan. 15. The dispute which began in July 2018 has significantly hurt demand for the natural fibre from its biggest consumer, China. Cotton prices posted their second straight annual decline in 2019. The US Department of Agriculture (USDA) in its weekly export sales report released earlier showed net sales of 246,200 running bales (RB) for the 2019/20 marketing year, up 82% from the previous week.

The export sales data was delayed by a day due to the New Year holiday. Total futures market volume fell by 11,789 to 22,378 lots. Data showed total open interest gained 5,060 to 226,857 contracts in the previous session. Certificated cotton stocks deliverable as of Jan. 20 totalled 9,038 480-lb bales, down from 9,127 in the previous session.