Cotton futures fell from two-week highs in light volume on Friday as investors who had covered short positions in the prior sessions decided whether to re-enter with long positions. The front-month May cotton contract on ICE Futures US dipped 0.13 cent, or 0.2 percent, to settle at 62.82 cents a lb, marking an inside day in which the price traded entirely within the prior session's range.
The May contract nonetheless ended the week up 2.32 cents, or 3.8 percent, the largest weekly gain for the front-month since mid-September of 2014.
Friday's slight losses followed two straight days of gains that saw the fiber hit a two-week high on Thursday. The most extensive move came on Wednesday after a US Federal Reserve statement prompted a drop in the US dollar, boosting cotton.
A weaker dollar supports greenback-traded commodities such as cotton by making them more attractive to holders of other currencies.
Further-short-covering occurred the following session, leaving the market low on buyers in low-volume trading on Friday, said Ron Lawson, a partner at commodity investment firm Logic Advisors in Sonoma, California.
"People that wanted to get out got out," Lawson said. "You had a bleeding off of the emotion created by the hard drive to the upside on Wednesday."
Friday's drift downwards came as speculators pondered whether cotton's fundamentals were strong enough to re-enter the market with long positions, Lawson said, adding there was likely some profit-taking following the gains of the prior two session's ahead of the week's end.
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