Cotton futures rallied just before Monday's close, boosted by late gains in US stocks, crude oil and a falling dollar, after spending much of the session with only moderate increases as many participants await Friday's supply/demand data, traders said. The December cotton contract jumped 0.93 cent to finish at 61.59 cents a lb, after trading from 60.67 to 61.72 cents.
December contract volume stood at 5,862 lots by 2:56 pm EDT (1856 GMT). March cotton rose 0.94 cent to end at 64.05 cents a lb, and dealt from 63.11 to 64.13 cents. "We were a little higher when we came in this morning. Then crude reversed and turned higher. The dollar was just a little bit lower, then it got pushed a lot lower.
Then stocks went up. So, I think it's outside markets pushing cotton up," said Jobe Moss, cotton broker at MCM Inc in Lubbock, Texas. Moss added that crop concerns related to a cold weather snap may have added to the boost, but would have already been figured into prices before the last-minute rally.
US stocks ended a four-day losing streak after a broker issued a bullish call on big banks and data showed the services sector expanded for the first time since August 2008. The improved US services sector data also helped crude oil prices, raising hopes of an economic recovery.
And the dollar slipped against other major currencies after a meeting of Group of Seven wealthy nations' finance ministers underscored the market's view that policy-makers are resigned to a gradually weakening dollar. For much of the session, cotton prices remained only slightly higher with many traders holding to the sidelines until Friday's monthly supply/demand report issued by the US Agriculture Department.
Many analysts are anticipating supportive numbers, with USDA widely expected to report world crop losses around 1.0-1.5 million (480-lb) bales. Brokers Flanagan Trading Corp pegged support in the December cotton contract at 60.30 and 59.55 cents, and identified next resistance at 62.20 and 63.95 cents. Total cotton volume traded Friday came to 8,275 lots from the prior tally of 7,910 lots, ICE Futures US said.