NEW YORK: ICE cotton futures fell more than 1% on Monday, pressured by a dampening demand outlook for the natural fiber and as index funds rolled over their positions from the front month.
Cotton contracts for July fell 0.75 cent, or 1.2%, to 61.04 cents per lb as of 1:51 p.m. EDT (1751 GMT). It traded within a range of 61.01 and 62.16 cents a lb.
"This week is kind of interesting because you have an index roll where the last of the long July futures are rolling out into other months, mainly December. So it's putting a little bit of pressure on the front of the board," said Louis Barbera, partner and analyst at VLM Commodities LTD.
Monday's pullback was also technical in nature, with the market "overdone after a very good run over the last couple of weeks despite some bearish fundamentals from the United States Department of Agriculture (USDA)," Barbera added.
The contract rose over 3% on Friday helped by a positive federal jobs report, which drove hopes of a revival in demand for apparel as the economy gradually reopens amid the COVID-19 pandemic.
Investors also kept a close eye on US-China friction, which has been pressuring the fiber market recently. The United States is the biggest exporter of cotton, while China is its largest consumer.
"There is currently no demand for cotton - especially for US bales as spot quotes are no longer competitive with those of Brazil, India, West Africa, and other exporting origins," Louis Rose, director of research and analytics at Tennessee-based Rose Commodity Group, said in a note.
Total futures market volume fell by 35,496 to 24,932 lots. Data showed total open interest fell 1,159 to 184,552 contracts in the previous session.
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