Benchmark cotton futures on ICE recovered from a 7-1/2-month low on Monday, after last week's 5 percent drop, on support from rising grains prices and chart signals. The December contract on ICE Futures US reversed earlier losses after dipping to 60.10 cents per lb, the lowest price since early February and near the key psychological level of 60 cents.
Buying came in as prices dipped near technically oversold territory. The December contract's 14-day relative strength index neared oversold territory as it dropped to 30.295 on Friday, stoking short-covering. "Sixty cents is a psychological low where a lot of people wanted to buy," said Louis Rose, an independent cotton trader and consultant at Risk Analytics in Memphis, Tennessee.
Traders awaited crop progress data due on Monday afternoon after the market close. Rising grains and equities markets also supported. Cotton contracts for December settled up by 0.24 cent, a 0.4 percent gain, to 60.79 cents per pound. It traded within a range of 60.10 and 60.92 cents a pound. The cash to second-month spread gained 0.66 cent to 0.13 cent per pound. Total futures market volume fell by 15,213 to 24,510 lots. Certificated cotton stocks deliverable as of Friday totalled 50,282 480-lb bales, down from 51,610 in the previous session. The dollar index was up 1.06 percent. The Thomson Reuters Core Commodity CRB Index, which tracks 19 commodities, was up 1.37 percent.