ICE cotton futures rose on Wednesday after falling to a three-year low in the previous session, as investors covered short positions ahead of the release of the USDA's monthly supply-demand report and the weekly export sales data. The most-active cotton contract on ICE Futures US, the second-month December contract, settled up 0.54 cent, or 0.85%, at 63.82 cents per lb. It traded within a range of 63.06 and 64.2 cents a lb.
On Tuesday, cotton prices had fallen more than 3% to a three-year low. "People thought the market came down too fast, too quick, so they are buying it and then people who have sold the market shorts, they are buying it back," said Keith Brown, principal at cotton brokers Keith Brown and Co in Moultrie, Georgia.
"There is anticipation for tomorrow's export numbers, supply-demand report and people want to book profits ... so they are going to buy back some of their positions." Investors await the release of the US Department of Agriculture's (USDA) monthly World Agriculture Supply and Demand Estimates (WASDE) report, due on Thursday, along with the weekly export sales data.
Meanwhile, the dollar fell on Wednesday after Federal Reserve Chairman Jerome Powell struck a downbeat tone in congressional testimony, saying trade uncertainties and concerns about the global outlook continued to exert pressure on the US economy.
The dollar was down about 0.4% against a basket of major currencies making greenback denominated commodities cheaper for investors holding other currencies. India's monsoon rains in the week ending on Wednesday were above average for the first time since the start of the season on June 1, helping farmers to accelerate the planting of summer-sown crops and easing concerns of drought.
Total futures market volume fell by 31,505 to 23,976 lots. Data showed total open interest gained 4,576 to 186,731 contracts in the previous session.
Certificated cotton stocks deliverable as of July 9 totaled 65,348 480-lb bales, down from 65,586 in the previous session.
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