NEW YORK: ICE cotton futures rose more than 2% on Tuesday to climb above the 80-cent level for the first since December 2018, helped by fund buying and a sagging US dollar.
The cotton contract for March was up 1.55 cents, or 2%, at 80.52 cents per lb by 12:57 p.m. EST (1757 GMT). It traded within a range of 78.97 and 80.72 cents per lb.
The contract is up for a ninth straight session.
“The funds are big buyers today,” said Jack Scoville, vice president at Chicago-based Price Futures Group, adding a weaker dollar is also helping cotton.
“The production in the last WASDE report was significantly reduced, and there are expectations that the USDA will reduce a little bit more. Demand has held up really strong and that’s bringing ideas of reduced ending stocks estimate.”
The dollar index fell 0.5% to its lowest level in 2-1/2 years against its rivals, making the natural fibre less expensive for buyers of cotton in other currencies.
A broader weakness in the US dollar, an extremely active 2020 Atlantic hurricane season in the United States and strong demand post-Covid-19 lockdowns helped cotton futures register their biggest annual rise in a decade last year.
Meanwhile, speculators reduced their net long position in cotton by 4,150 contracts to 60,098 in the week to Dec. 29, data from the US Commodity Futures Trading Commission showed on Monday.
Total futures market volume fell by 11,509 to 26,745 lots. Certificated cotton stocks deliverable as of Jan. 4 totalled 70,847 480-lb bales, unchanged from 70,847 in the previous session.