Cotton futures pushed up to a close nearly 4.0 percent higher on Tuesday, as the dollar weakened ahead of US presidential election results, renewing buying of most commodities, brokers said. "The general rise in commodity prices drove cotton up, with the weak dollar," said Mike Stevens of Swiss Financial Services in Louisiana.
After a steep decline to a 3-3/4-year low on Friday, short cover buying accounted for some of cotton's rise once its price rally gathered momentum, they added. The key December cotton contract settled with 1.64 cent gains at 46.32 cents per lb. The range high extended up to 46.89 cents, a near 4 percent gain.
The day's low was 44.36, a double bottom on the cotton chart, suggesting that level might offer support. Last Friday, December cotton futures slid to a new lifetime low of 43.64 cents, a level last visited in February 2005. March cotton ended up 1.72 cents at 50.87 cents. December cotton volume reached 8,405 lots by 3:20 pm (2020 GMT).
Many cotton buyers saw a buying opportunity off Friday's low, but were waiting for a more robust market to jump in an take advantage of the dip, traders said. "On Friday, we put in a low. Yesterday, we went up and today, we followed through with the rest of the markets," Stevens added.
While cotton's volume was relatively light, traders noted that a variety of players came in to buy the fiber contract. They also said the decline in open interest, despite cotton's price rise on Monday, indicated short cover buying that continued on Tuesday.
On Monday, cotton futures volume slipped to 17,044 lots compared with 25,981 lots in Friday's session, exchange data showed. Open interest in the cotton market was down 1,527 lots at 169,442 contracts as of November 3, it said. Most players stayed on the sidelines in anticipation of the results of Tuesday's US presidential race. But some brokers said they thought cotton could rally again on Wednesday if the dollar continued to soften.
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