NEW YORK: ICE cotton futures rose over 3% to a one-month high on Wednesday, as a weaker US dollar made the natural fiber less expensive for overseas buyers.
The cotton contract for March was up 3.65 cents, or 3.3%, at 113.70 cents per lb by 12:34 p.m. ET (1734 GMT), its highest level since Nov. 26.
The dollar index was down 0.3% in thin holiday trading as investors looked beyond a surge in Omicron cases.
The weakness in the dollar is supporting cotton prices and there is further support from a strong stock market, said Keith Brown, principal at Keith Brown and Co in Georgia.
“The price moves are also part of year-end volatility as trading is happening in very low volumes.”
The Dow index inched towards an all-time high on a boost from retailers Home Depot and Nike, while record daily US COVID-19 infections kept gains in check amid low trading volumes in the final week of the year. Investors now await the US Department of Agriculture’s weekly export sales report due on Thursday.
“Demand for US cotton is robust and might continue to grow stronger in 2022 if the supply chain situation improves,” added Brown.
Total futures market volume rose by 66 to 14,569 lots. Data showed total open interest gained 484 to 234,850 contracts in the previous session.
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