NEW YORK: ICE cotton futures edged lower from an over six-month peak hit earlier on Tuesday, after concerns of crop damage due to Hurricane Sally eased a little bit and on some technical selling.
Cotton contracts for December settled down 0.18 cent, or 0.3%, at 66.44 cents per lb, after hitting their highest since Feb. 25 at 66.93 cents.
Hurricane Sally is not really a big hurricane as of now and probably not going to impact the cotton-growing regions much, said John Bondurant, a cotton trader.
Sally weakened into a Category 1 hurricane on Tuesday as it closed in on the US Gulf Coast, although it threatens historic floods, with more than 2 feet (61 cm) of rain expected in some areas.
Prices had jumped as much as 3.2% on Monday on concerns of crop damage from the storm.
The market got drastically overbought, said Louis Barbera, partner and analyst at VLM Commodities LTD, adding "the market is overdone technically and needed to come back off."
The contract touched the technically overbought territory with a relative strength index (RSI) over 70 on Monday. An RSI of less than 30 signals oversold, while over 70 signals overbought.
Meanwhile, the US Department of Agriculture's (USDA) weekly crop progress report on Monday showed 45% of the crop was in good/excellent condition, unchanged from last week and up from last year's 41%.
Demand for the natural fibre has been battered by the coronavirus pandemic that has upended economies, sending prices over 5% lower so far this year.
Total futures market volume fell by 10,516 to 28,751 lots.