Cotton futures rose for a second-straight day on Friday, as fund interest remained strong on the back of a weaker dollar and prospects of further stimulus in the world's largest economy. Cotton benefited from a drop in the US dollar and rallies in commodities like crude oil and gold after anaemic monthly US jobs data spurred investor bets that the Federal Reserve will unveil a new round bond buybacks, know as quantitative easing, perhaps as early as next week.
Employers added 96,000 jobs to payrolls in August, below economists' expectations of 125,000. The unemployment rate fell to 8.1 percent in August from 8.3 percent in July, though economists cautioned that the fall largely reflected a drop in participation in the labour force.
The Fed optimism comes on the heels of Thursday's move higher across the broader financial market on the back of a new bond-buying program in Europe aimed at containing the region's debt crisis. "It's all on the outside markets ... gold's up $35, the dollar's down sharply," said Jobe Moss, of MCM Inc in Lubbock, Texas. "The funds just keep buying it. They're getting long, and that's what is pulling it up."
The benchmark December cotton contract rose 0.31 cent to end at 76.30 cents per lb, after moving between 75.55 and 77 cents. John Flanagan, an analyst at Flanagan Trading Corp in North Carolina, said the market also received a boost from a good weekly export sales report, out earlier in the day Friday.
"It's a pretty good pace for this time of year for selling cotton. I'm surprised it was as much as it was," he said. Looking ahead, the market will turn its attention to next week's release of the US Department of Agriculture's September crop production report on Wednesday, September 12. ICE cotton futures volumes hit 14,300 lots in late New York business, more than 20 percent below the 30-day norm, according to preliminary Thomson Reuters data.
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