Cotton futures settled higher Monday on the back of a weak dollar and broad gains in other commodities, but selling pressure by growers limited the advance, brokers said. The key March cotton contract rose 0.4 cent to close at 76 cents per lb, trading from 75.67 to 76.77 cents. Volume traded in the March contract hit 10,341 lots at 2:29 pm EST (1929 GMT).
Brokers Flanagan Trading Corp cited broad-based gains in outside markets and a weaker US dollar for cotton's rise. "However, cotton should soon run into grower selling, which should provide resistance at current levels for a while," Flanagan said. The dollar weakened on Monday as broad gains in stock and commodity prices encouraged investors to seek riskier, high-yielding investments at the expense of the greenback.
The annual rebalancing of investment fund portfolios beginning in January could also boost cotton prices if fund managers decided to increase their weightings for cotton, a commodity they have long believed is undervalued. The US cotton industry remains worried about volatile trading in the futures market and is hopeful that demand is gradually recovering from the world's worst economic downturn in 70 years, a senior official said Monday.
Industry players are meeting at the National Cotton Council's annual Beltwide Cotton Conference which runs Monday through Thursday in New Orleans. Total volume traded Thursday hit 6,912 lots, against the previous 7,529 lots, according to data from ICE Futures US Open interest in the cotton market stood at 187,960 lots as of December 31, from the prior count of 187,081 lots, the exchange said.
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