The US cotton futures rallied for a third straight session on Tuesday as a weak dollar drew more fund money into the market, despite lower prices of other industrial commodities like oil and copper.
"Cotton was totally independent of influence from outside commodities today as speculative fund buying and commercial short covering exploded from another collapse in the dollar," said Mike Stevens, sector analyst at Swiss Financial Services in Mandeville, Louisiana.
The key July cotton contract on ICE Futures US settled up 0.86 cent, or 1.5 percent, at 58.65 cents per lb as the dollar plumbed to 2009 lows. The session high was 58.88 cents - the highest since May 15. July cotton has gained 4.42 cents, or nearly 8 percent, over the last three sessions. The rally comes after a fortnight of lower prices through early May, following rains over US cotton growing areas in Texas.
The crop in Texas had faced extreme drought conditions, sparking harvest worries that sent cotton prices up as much as 20 cents between mid-March and mid-May. And despite the views of some analysts that the current fund-driven rally in commodities may not last, traders said cotton could be an exception.
Tuesday's volume in July cotton stood at 9,280 lots, versus Monday's 11,215 lots. Futures for new-crop December closed up 0.8 cent, or 1.3 percent, at 62.52 cents. Total volume in ICE cotton at Monday's settlement stood at 18,114 contracts, versus Friday's 20,600 contracts, exchange data showed. Open interest fell by 1,641 lots to 132,108.
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