ICE cotton futures settled lower on Tuesday as the dollar strengthened to near two-year highs while wet weather in west Texas was deemed favourable ahead of plantation. The most-active cotton contract on ICE Futures US July settled down 0.56 cent, or 0.71 percent, at 77.91 cents per lb.
It traded within a range of 77.17 and 78.52 cents a lb. "Heavy rains in west Texas are weighing on prices," said Rogers Varner, president of Varner Brokerage in Cleveland, Mississippi, adding that the stronger US currency added pressure to falling prices.
The dollar index, which measures the greenback against six currencies, rose to its highest level since June 2017 in the session. Rains are often favourable ahead of planting, especially in top producing state Texas. "The market is running through some severe resistance as it nears 79 to 80 cents on the July contract," said Ed Jernigan, chief executive at Jernigan Global, a cotton textile supply chain manager.
"This comes from the fact that we do not have a China- US trade deal yet. There has been a whole lot of talk and no action," Jernigan said. Cotton markets also watched for news that China is to sell 1 million tonnes of cotton from its state reserves, marking the biggest reserve auction in at least 13 months.
Total futures market volume rose by 14,261 to 36,182 lots. Data showed total open interest fell 1,826 to 211,312 contracts in the previous session. Certificated cotton stocks deliverable as of April 22 totalled 61,110 480-lb bales, up from 57,655 in the previous session.