NEW YORK: ICE cotton futures fell on Monday to a one-week low as investors liquidated positions ahead of a federal supply and demand report, while a rising US dollar further weighed on the natural fiber.
The cotton contract for March fell 0.41 cent, or 0.5%, to 79.36 cents per lb by 11:13 a.m. EST (1613 GMT), having touched its lowest since Jan. 4 at 78.65 cents earlier in the session.
It traded within a range of 78.65 and 80.25 cents a lb.
“Lot of people are pulling off long positions ahead of the USDA reports tomorrow. Nobody knows what the USDA is going to say and even though the reports are expected to be kind of friendly to the market, we are unsure,” said Jack Scoville, vice president at Chicago-based Price Futures Group.
The highly anticipated US Department of Agriculture’s (USDA) monthly World Agriculture Supply and Demand Estimates (WASDE) report is due on Tuesday.
However, “assuming reports do come bullish then we’ll be right back up again,” Scoville said, adding, it is a short-term sell-off and the rising dollar was also weighing on cotton prices.
Prices had risen to their highest level since December 2018 at 80.93 cents in the previous week.
The US dollar edged higher against key rivals, extending a rebound from a near three-year low hit last week and making greenback-denominated cotton costlier for investors holding other currencies. In the broader markets, global equity indexes slipped from record highs as caution over rising coronavirus cases saw some profit-taking from investors.
According to a Reuters tally, worldwide COVID-19 cases surpassed 90 million on Monday, with new variants of the coronavirus spreading rapidly. Total futures market volume fell by 1,028 to 23,064 lots.
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