NEW YORK: ICE cotton futures eased off a three-week high hit in the previous session on Wednesday, pressured by an uptick in the dollar.
Cotton contracts for December fell 0.47 cent, or 0.6% to 84.34 cents per lb by 12:16 pm EDT (1616 GMT). It traded within a range of 84.18 and 85.09 cents a lb.
The dollar was up 0.1% against rival currencies, increasing the cost of greenback denominated cotton for buyers holding other currencies.
“The cotton market has had good demand for a long-time (and) that is supporting the market, so this is just a small delay in what looks like an attempt to break out to the upside,” said Rogers Varner, president of Varner Brokerage in Cleveland.
Market participants were also keeping an eye on weather developments and its impact on the crop in the top cotton producing West Texas region.
“Demand is going to stay good as the world economy reopens but as far as the weather, it’s a roulette wheel- you don’t know what you’re going to get, and therefore the market will keep a premium in the price well into the growing season,” Varner said.
The US Department of Agriculture’s weekly crop progress released on Tuesday showed that 43% of the cotton crop was in good-to-excellent condition by the week ended May 30, on par with 44% this time last year.
Given talk of major acre reductions in the delta and uncertain Texas weather, the cotton market should trade in the 80s through June, Louis Rose, director of research and analytics at Tennessee-based Rose Commodity Group, said in a note dated June 1.
Total futures market volume fell by 25,828 to 16,457 lots. Data showed total open interest gained 3,818 to 230,311 contracts in the previous session.