Cotton hits 1-week low as dollar's strength offsets firm export sales

ICE cotton futures fell to a one-week low on Thursday, weighed down by a stronger dollar, however positive export sales report from the US Department of Agriculture (USDA) limited further decline.

The front-month cotton contract on ICE Futures US settled down 0.64 cent, or 0.82 percent, at 76.98 cents per lb.

The contract fell to its lowest level since April. 4, at 76.86 cents per lb.

"Market is going down despite good export sales report for cotton... weaker stock market and strong dollar seem to be main factors affecting the prices today," said Jack Scoville, vice president at Price Futures Group in Chicago.

The dollar index was up 0.3 percent. A stronger greenback makes commodities priced in dollars, such as cotton, more expensive for holders of other currencies.

Data from the USDA showed net sales of 289,000 running bales in the 2018/19 marketing year for the week ended April 4, down 10 percent from the previous week, but up 39 percent from the prior 4-week average.

Meanwhile, a "bomb cyclone" blizzard hit the Rockies on Wednesday and spun into the US Plains and Midwest, bringing fears of more flooding in areas still recovering from last month's deluge.

"We have (a) big storm going through the northern part of the country where we don't grow cotton but we have another storm expected to hit (the) southern part of US where we have lot of cotton, which is going to limit progress in plantation," Scoville said.

On the trade front, US Treasury Secretary Steven Mnuchin said on Wednesday that progress continues to be made in the talks, including a "productive" call with China's Vice Premier Liu He on Tuesday night.

Total futures market volume rose by 5,041 to 55,907 lots. Data showed total open interest fell 2,082 to 219,456 contracts in the previous session.

Certificated cotton stocks deliverable as of April 10 totaled 52,374 480-lb bales, up from 48,280 in the previous session.

Copyright Reuters, 2019