ICE cotton fell slightly on Monday as traders hesitated to add further to positions with prices still near five-year highs, with gains in the dollar and drops in grains markets providing some pressure. The most-active May cotton contract on ICE Futures US fell 0.08 cent, or 0.1 percent, to settle at 64.85 cents a lb.
Fiber traded within a relatively thin range on Monday, never falling below the prior session's low or rising above the prior session's high. The inside day came after cotton ended its fifth consecutive week of gains on Friday, and after US government data showed speculators had reached their largest net long position since May 2014.
"There are offers above and bids below and not much to do in between," said Chris Kramedjian, a risk management consultant at INTL FCStone in Nashville, Tennessee. Traders looked ahead to the US government's weekly sales report expected this Thursday and monthly supply/demand data expected next week to provide fresh fundamental news, Kramedjian said.
He added that traders were also waiting to see how top consumer China would behave on the market as it returned from Lunar New Year holiday celebrations, in addition to further clues as to how quickly No 2 consumer India would auction its inventory onto the market. In the absence of major fundamental or technical drivers, a strong dollar and drops in soybean and corn markets weighed on cotton. A strong dollar weighs on greenback-traded commodities such as cotton by making them more attractive to holders of other currencies, while the grains compete with cotton for acreage, so falling prices make planting cotton more attractive.