ICE cotton fell to its lowest level in nearly 5-1/2 years on Thursday, pressured by gains in the US dollar and investor selling in response to multiple contract lows hit in recent sessions. The most-active front-month March cotton contract on ICE Futures US fell 0.25 cent, or 0.4 percent, to settle at 57.76 cents a lb, after earlier falling to 57.58 cents a lb, its lowest level since September 4, 2009.
The Euro fell to an 11-year low against the US dollar on Thursday after the European Central Bank launched a 1 trillion euro government bond-buying program to stimulate the economy. The dollar rose to its highest level against a basket of currencies in more than 11 years, pressuring the fiber market, traders said, adding that declines in crude oil and grains markets also weighed on cotton.
A stronger dollar weighs on greenback-traded commodities like cotton by making them more expensive to holders of other currencies. The March contract has now hit a contract low in three sessions, which encourages speculators to liquidate long positions, said Jobe Moss, a broker with MCM Inc in Lubbock, Texas.
"New contract lows bring in more fund selling," Moss said. Traders awaited the results of a US Agriculture Department (USDA) export sales report due Friday, delayed by one day due to the Martin Luther King Jr. Holiday on Monday. Last week, USDA data showed new sales of 441,800 bales, a marketing-year high and well above market expectations. "We had a big export figure last week," Moss said. "The question is are we going to have a big one this week?
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