New York cotton prices slipped on Wednesday, following the broader commodity markets lower on the back of a stronger US dollar, dealers said. The most-active July cotton contract on ICE Futures US eased 0.47 cent, or 0.5 percent, to settle at 86.45 cents per pound after trading as low as 85.61 earlier in the session. "Prices took their lead from the broader commodity markets," said INTL FCStone analysts. "Cotton has held up better than most, but is still vulnerable to the broader selling."
Any further drop to test 83 cents would likely stir demand, they said. While nearby prices were under pressure, July's premium to December widened to 0.96 cent from 0.76 cent on Tuesday as some merchants worried about dwindling US supplies ahead of the end of the season on July 30. With over 500,000 bales in certified exchange stock, most market participants said there was no reason for alarm. Cotton bulls have noted that demand from China has remained robust even as prices have traded at historically high levels since mid-January.
On Wednesday, the 19-commodity Thomson Reuters-Jefferies CRB index closed down nearly half a percent for a second straight session. Fifteen of the CRB's 19 components ended in the red, with Brent crude and natural gas bucking the trend, each rising about 1 percent. The dollar hit a six-week high against the euro as data showing an unexpectedly large contraction of the euro zone economy raised expectations for more monetary easing by the European Central Bank. The dollar had rallied against other major currencies since late last week, making dollar-denominated raw materials costlier to holders of other currencies.