ICE cotton futures inched higher on Monday, moving close to a six-week high, as investors covered short-positions amid a sagging dollar. The December cotton contract on ICE Futures settled up 0.06 cent, or 0.1 percent, at 68.86 cents per lb. It traded within a range of 68.5 and 69.7 cents a lb.
"Given the current rains across West Texas (the price movement) is more likely on short-covering," said Louis Rose, co-founder and director of research and analytics at Rose Commodity Group. The US dollar on Monday hit a 2-1/2-year low against the euro and touched a more than six-week low against the yen. The dollar index was down 0.40 percent. The Thomson Reuters CoreCommodity CRB Index, which tracks 19 commodities, was up 0.27 percent.
"The market seems to be stuck between a bullish current crop and a potentially bearish new crop scenario," Plexus Cotton said in a note. "Demand has clearly been stronger than anticipated this season... to the point that origins like the US and India will basically be out of cotton by the time new crop is harvested."
Speculators increased a net long position in cotton by 2,191 contracts to 17,251 contracts in the week to July 25 after adopting a bearish stance for nine straight weeks, the Commodities Futures Trading Commission (CFTC) data showed on Friday. Since late May, speculators had been unwinding their net long position in the commodity to the smallest since April 2016.
"The CFTC report is back tracked so they increased their longs during the consolidation of the past week. The market could move higher from additional longs entering the market though," said Anestis Arampatzis, risk management consultant with INTL FCStone. Total futures market volume rose by 8,839 to 19,153 lots. Data showed total open interest fell 430 to 216,063 contracts in the previous session.
Elsewhere, two Indian states have asked cotton farmers to step up pesticide sprays to ward off potential harmful bug attacks as dry weather conditions in some parts of the top-cotton producing country risk triggering infestations of pests.
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