NEW YORK: Cotton futures fell and were en route to a third straight week of losses on Friday as the dollar rebounded and the natural fiber took cues from weaker grain markets.
Cotton contracts for May fell 0.71 cent, or 0.80 %, at 87.64 cents per lb, at 12:58 PM EDT. It traded within a range of 85.95 and 88.49 cents a lb.
The contract was down 0.3% in the week, its third straight weekly decline.
"Soybeans and corn, had a little bit of dip down and the dollar being stronger is contributing to it (cotton's fall)," said Louis Barbera, partner and analyst at VLM Commodities Ltd.
The US dollar rose against rival currencies, increasing the cost of greenback-denominated cotton for buyers holding other currencies.
Further weighing on prices, grain markets weakened with Chicago wheat futures extending losses to a one-month low, while soybean and corn also eased.
"The US has become competitive ... we are still among the cheapest in the world and we don't have enough cotton," that should support prices, Barbera added.
United States Department of Agriculture's weekly export sales report on Thursday showed net sales of 212,000 Running Bales (RB) for the 2020/2021 marketing year. That was 25% above the previous week and 5% higher than the prior 4-week average.
"While this (week's) sharp correction has introduced some uncertainty into this bull market, none of its supporting factors have disappeared," Peter Egli, director of risk management at British merchant Plexus Cotton said in a note.
"If anything, this price break accelerated the selling of remaining US supplies and has thereby made the situation more dangerous for the shorts," Egli added.
Total futures market volume fell by 17,366 to 20,132 lots. Data showed total open interest gained 393 to 232,083 contracts in the previous session.-Reuters
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