NEW YORK: ICE cotton futures fell on Wednesday, as investors booked profits following gains in the previous session, while a stronger dollar further weighed on the natural fibre. Cotton contracts for December settled down 0.44 cent, or 0.7%, at 64.96 cents per lb.

On Tuesday, prices rose to 66.44 cents per lb, their highest since August 25, when cotton had scaled a near six-month peak. "The funds have gone long and when that happens, you are going to see profits taken as the market goes up," Sid Love, commodity trading adviser at Kansas-based Sid Love Consulting, said, adding that a stronger dollar was also weighing on prices.

An announcement of a Covid-19 vaccine can move prices convincingly up, he added. Cotton has fallen 7.7% this year hurt by a decline in apparel demand after coronavirus stalled economic activity. Funds increased their net long position in cotton futures in the week to Aug. 25, adding 10,546 contracts to a total of 41,684 contracts, data showed on Friday.

The dollar rose 0.6%, bouncing back from a more than two-year trough hit in the last session. A stronger greenback makes commodities priced in dollars, such as cotton, more expensive for holders of other currencies.

"The market has strengthened based on continued uncertainty about the eventual size of the US crop, good export reports, and increased optimism for US-China trade relations," Don Shurley, professor emeritus of cotton economics at University of Georgia wrote in a note.

However he added, "each week that passes, the crop is more open and more vulnerable to weather." Investors were now awaiting the United States Department of Agriculture's (USDA) weekly export sales report due on Thursday. Total futures market volume fell by 5,507 to 23,663 lots. Data showed total open interest gained 1,475 to 209,578 contracts in the previous session.