Cotton futures gain on weaker dollar, short-covering
Cotton prices rose more than 1% on Wednesday, as some investors covered short positions, while a weaker dollar provided further support to the natural fiber.
The front-month December contract, was up 0.95 cent, or 1.5%, at 64.48 cents per lb as of 1:34 p.m. EDT (1734 GMT).
It traded within a range of 63.04 and 64.58 cents per lb.
“The dollar is down a bit and there is some spec short-covering, which is helping cotton prices,” said Rogers Varner, president of Varner Brokerage in Cleveland, Mississippi.
The dollar index fell 0.4% to a one-month low against a basket of major currencies. A weaker greenback makes commodities priced in dollars, such as cotton, cheaper for holders of other currencies.
Market participants are closely watching the latest on the US-China trade front.
US President Donald Trump said on Friday that China had agreed to purchase $40 billion to $50 billion worth of agricultural goods from the United States in a first phase of an agreement to end their trade war.
However, Trump on Wednesday said he likely would not sign any trade deal with China until he meets with Chinese President Xi Jinping at the upcoming APEC Forum in Chile.
The United States is one of the world’s biggest producers of cotton, while China is the largest consumer.
On the technical side, “ICE futures should experience resistance near 65.00 cents and then 67.00 – 68.00 cents and 70.00 – 71.00 cents basis Dec, over the near-to-medium-term,” Louis Rose, director of research and analytics at Tennessee-based Rose Commodity Group, said in a note. Total futures market volume fell by 21,537 to 30,879 lots. Data showed total open interest fell 3,132 to 238,693 contracts in the previous session.