Benchmark cotton futures on ICE Futures US dropped to a more than three-month low on Thursday as speculators liquidated long positions to square their books ahead of the month's end, and the US dollar rose on expectations of an interest rate hike.
"We still have this tone of deflation in all the markets, so who wants to buy cotton?" said Keith Brown, a Moultrie, Georgia-based cotton trader. A stronger dollar pressures greenback-traded commodities like cotton by making them more expensive to holders of other currencies. December cotton settled down by 0.34 cent on Thursday, a 0.5 percent loss, at 63.55 cents per pound, after falling as low as 63.50, the lowest for the second month since April 23.
US farmers sold 23,000 bales of cotton from the 2014/15 crop, down 75 percent from the prior week, according to a weekly US government export sales report. Sales of cotton from the 2015/16 crop year totalled 4,000 bales. Total futures market volume rose by 625 to 13,753 lots. Data showed total open interest fell 299 to 177,114 contracts in the previous session. Certified cotton stocks deliverable as of July 29 totaled 116,181 480-lb bales, down from 118,005 in the previous session. The dollar index was up 0.55 percent. The Thomson Reuters CoreCommodity CRB Index, which tracks 19 commodities, was down 0.37 percent. The Relative Strength Index in the most-active contract fell to 38.936.