By Julie Wernau
The cotton market gained a boost Wednesday from a weaker dollar ahead of a weekly update on sales of the fiber overseas.
Cotton for March delivery rose 1.8% to 70.61 cents a pound on the ICE Futures U.S. exchange. The Wall Street Journal dollar index, which measures the dollar against a basket of currencies, was down 0.2% recently, making dollar denominated goods relatively less expensive abroad.
"The bias is still to the upside, but it's a tread lightly trade," said Erik Tatje, market strategist at RJO Futures in Chicago.
Demand for cotton has been robust in recent weeks and traders are largely anticipating strong demand again in Thursday's report. Bulls have piled into the contract over the last month and any surprise to the downside could lead to a sell off in those bets, which were at near record highs for the year as of last Tuesday.
Mr. Tatje said a move above 72 cents would be a good opportunity to place short positions.
The USDA reported that as of the week ended Dec. 15 it had classed 967,649 bales of upland cotton, the most common variety grown in the U.S., which brings the season total to about 75% of USDA's expected production, according to The Rose Report, mostly of strong quality.
In other markets, raw sugar for March was up 0.4% at 18.32 cents a pound, cocoa for March rose 1% to $2,279 a ton, arabica coffee was up 0.5% at $1.445 a pound, frozen concentrated orange juice for January delivery lost 0.6% to $2.005 a pound and March cotton was up 2% at 70.70 cents a pound.
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(END) Dow Jones Newswires
December 21, 2016 11:55 ET (16:55 GMT)
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