Cotton futures rose more than 1 percent on Friday as a weaker dollar and gains across broader commodities markets helped offset speculator selling, spurring a small recovery in prices from 6-1/2-year lows earlier this week. The cotton market will likely see a rebound once the selling pressure eases "in a matter of days," Peter Egli, director of risk management at British merchant Plexus Cotton, said in a note.
On Monday, prices hit 54.53 cents, their lowest since June 2009, amid concerns over demand for the natural fibre and the release of a massive stockpile held by China. "For the last couple of days, we've had extremely light volumes; the market is a little bit sold out," said Lou Barbera of ICAP Cotton. In their biggest bearish stance since November 2006, speculative investors increased their net short positions in cotton by 7,223 contracts to 26,864 in the week ended March 1, government data showed on Friday.
The May contract on ICE Futures US settled up 0.7 cent, or 1.24 percent, at 57.11 cents per lb, after climbing as high as 57.2 cents. The contract closed the week down about 0.73 percent, registering the second straight week of losses. The dollar index was down 0.28 percent. The Thomson Reuters CoreCommodity CRB Index, which tracks 19 commodities, was up 2.13 percent. Total futures market volume fell by 1,397 to 18,256 lots. Data showed total open interest gained 1,615 to 207,158 contracts in the previous session.