NEW YORK: ICE cotton futures climbed to a more than one-week peak on Friday and headed for a weekly gain, boosted by a weaker dollar and concerns over crop quality after heavy rains lashed major growing regions.
Cotton contracts for December rose 0.30 cent, or 0.4%, at 87.03 cents per lb, by 12:13 a.m. EDT (1613 GMT), after hitting their highest since June 14 at 87.55 cents.
For the week, prices were up 2%. “As far as the crop is concerned, with all the rain and flooding in the delta, rain in the southeast, and particularly Georgia, there’s a lot of unanswered questions,” said Sid Love, commodity trading adviser at Kansas-based Sid Love Consulting.
A weaker dollar and the market pricing in lower cotton acreage in the US Department of Agriculture’s June 30th report is further providing support, Love added.
Analysts and traders in a Reuters poll estimate cotton plantings for 2021 at 11.856 million acres in next week’s report, down from March’s 12 million acres.
The dollar eased against rivals, making cotton affordable for other currency holders.
“December (contract) is once again on its way to challenge the previous peaks in the 88-89 area. A break above these key resistance points would open the door for an explosive move into the 90s,” Peter Egli, director of risk management at British merchant Plexus Cotton, said in a note.
“However, the lack of volume and the prospect of more rain in West Texas leads us to believe that the time is not yet ripe for a breakout. We therefore feel another pullback is more likely.”
Total futures market volume fell by 7,219 to 8,418 lots. Data showed total open interest gained 1,846 to 210,003 contracts in the previous session.
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