NEW YORK: ICE cotton futures rebounded on Monday, following a dive of more than 3% in the preceding session, with the natural fibre drawing support from a tepid dollar and upbeat risk sentiment as US equities scaled record peaks.

Cotton contracts for May rose 1.03 cents or 1.3% to 78.98 cents per lb by 12:59 p.m. EDT. It traded within a range of 78.7 to 79.6 cents a lb. Prices tumbled 3.9% on Thursday.

“It (cotton) is recovering from Thursday’s level, (but) overall it still seems to be in a holding pattern - trying to choose a direction for the near-term,” said Bailey Thomen, cotton risk management associate with StoneX Group.

Cotton’s near-term price action will likely be influenced by speculators largely focused on its weak technical outlook, but longer-term, prices could rise as focus returns to the fundamental outlook which points to a tighter market, Thomen added.

The dollar dropped to its lowest level since March 25, lowering the cost of cotton for buyers holding other currencies. USD/

Also helping the natural fibre was strong U.S jobs data that provided a fillip to bets for a swift economic recovery and lifted US equity indexes to record highs.

The US supply and demand balance sheet is tight and the new cotton crop is still uncertain as West Texas continues to wait for rain, which could drive prices higher, Peter Egli, director of risk management at British merchant Plexus Cotton, said in a note dated April 1. Matching market expectations, the US Department of Agriculture estimated lower all cotton planted area for 2021 at 12.0 million acres last week.