ICE cotton futures jumped 1.5 percent on Wednesday to a seven-week high, buoyed by short-covering by speculators amid a weaker dollar. The December cotton contract on ICE Futures settled up 1.03 cent, or 1.49 percent, at 70.34 cents per lb and touched a high of 70.4 cents, a peak since June 15.
"(It's) short-covering by speculators. For six weeks we have dealt with the base and market is now trying to break out of that base and test resistance at 72 (cents)," said Peter Egli, director of risk management at British merchant Plexus Cotton. "I think it's more technical than anything. There's not a lot of new buying coming in. Fundamentally, the market was surprised because we had good rains in Texas," he added.
The contract has gained more than 6 percent since hitting a 10-month low of 66.15 cents per lb on June 26. The US dollar hit its lowest level against the euro in more than 2-1/2 years on Wednesday, while the dollar index, which measures the greenback against a basket of six major rivals, was last down 0.2 percent.
Total futures market volume rose by 5,723 to 24,708 lots. Data showed total open interest gained 194 to 216,622 contracts in the previous session. The weekly US export sales data is due on Thursday. Meanwhile, erratic distribution of rainfall in major cotton producer India has clouded the outlook for several key summer-sown crops, raising concerns of a potential limiting of exports of the natural fiber from the country.
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