NEW YORK: ICE cotton futures fell about 1% on Tuesday following a sharp rise in the previous session, as a subdued sentiment in equity markets weighed on the natural fibre.
Cotton contracts for May fell 0.91 cent, or 1%, to 90.66 cents per lb, by 1:32 pm ET (1832 GMT). It traded within a range of 90.13 and 91.45 cents a lb.
The fibre gained as much as 4.5% in the previous session but has retreated from the over two and a half year highs recorded last week.
“The stock market is lower; that’s weighing on sentiment a bit. Also, cotton might be getting little overpriced,” said Jack Scoville, vice president at Chicago-based Price Futures Group.
“However, demand for cotton has been pretty strong,” he added.
Wall Street’s major stock averages dipped after a strong start to the month as U.S benchmark treasury bonds remained elevated.
Offering some respite to cotton, the dollar index dipped 0.3% after the US unit hit near a one-month high against its rivals, making cotton less expensive for holders of other currencies.
Market participants were also keeping an eye on developments on a $1.9 trillion U.S stimulus package that awaits approval by the Senate.
“Despite forecasts for continued strong demand for textile consumption, we remain skeptical,” Louis Rose, director of research and analytics at Tennessee-based Rose Commodity Group, said in a note.
“Droughty conditions across West Texas remain a concern, but current prices for new crop cotton could also propel US acreage to 13 million acres or above this year,” he added.