US cotton futures were swept lower on Tuesday, retracing the previous three days of gains, on profit taking and pressure from other commodities. After hitting six-week highs on Monday, just shy of 74.5 cents, the most-active March contract on ICE Futures US settled down 1.07 cents, or 1.44 percent, on Tuesday at 72.91 cents per lb.
"As you get to 75 cents, business doesn't follow and the market backs off as it has today," said a source at a big US mill. Prices pierced a 100-day moving average on the way down, but garnered technical support at its 40-day moving average around 72.5 cents.
The market has been stuck in a range between 70 and 75 cents for the past six weeks, finding support at the lower end from Chinese mill buying. Given the plentiful supplies of material and lacklustre demand expected in this marketing year, traders said it was logical for prices to fall off Monday's high.
"There's plenty of cotton out there," said a veteran cotton trader. Selling across the broader commodities market also weighed on fibre prices. Oil and gold led the asset class lower as protracted US budget negotiations and concerns about the global economy made investors risk averse. The sell-off came despite the dollar's drop to a seven-week low against the euro. A weaker dollar usually boosts commodities priced in the currency, including oil and soybeans, as holders of the euro find those assets more affordable. Certificated stocks rose to 76,431 bales from 60,174 bales as the US harvest nears completion. Some 26,717 bales are pending review.
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