US cotton futures ended higher on Tuesday, as a weak dollar and accelerated cross-commodity rally helped fibre values overcome initial selling pressures tied to weaker overseas markets. The key December cotton contract on ICE Futures US eked out a 0.02-cent gain to settle at $1.2201 per lb, after dealing from $1.1977 to $1.2328.
Cotton bounced back from earlier downside pressure linked to China's cotton futures market, where the Zhengzhou Commodity Exchange January cotton futures fell sharply for the second straight day.
Positive momentum built from there, with a generally upbeat tone in most other commodity markets feeding the gains. As a result, the Reuters-Jefferies CRB Index, a global commodities benchmark, posted its biggest one-day gain in six weeks as optimism for a resolution to Greece's debt crisis boosted investors' risk appetite. Despite the positive reversal, total market volume in cotton futures stood at a paltry 6,000 lots, more than 70 percent below the 30-day norm, Thomson Reuters preliminary data showed.
The spot July cotton contract fell 1.09 cents to finish at $1.6091 per lb. ICE Futures US will increase its ability to adjust trade prices in softs futures, the latest in a series of changes it has made to deal with volatility in its coffee, cocoa, cotton and sugar markets. Market participants will now look forward to the US Agriculture Department's annual planted acreage report on Thursday, which will show how much was planted to major row crops in the United States.
A Reuters survey of brokers and analysts showed they expect 2011 cotton plantings to average 13.26 million acres (5.366 million hectares), up from the US Department of Agriculture's (USDA) March projection of 12.566 million acres. Open interest in the ICE futures cotton market amounted to 133,962 lots as of June 27, ICE Futures US data showed.
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