Cotton Prices Increase Most in Two Weeks as Dollar Declines
Source: Bloomberg Date: 2008-11-07
Nov. 4 (Bloomberg) -- Cotton futures rose the most in two weeks as the dollar fell, boosting the appeal U.S. commodities, and investors unwound bets on falling prices of the fiber.
The dollar tumbled against a basket of six major currencies as declines in money-market interest rates reduced demand for the greenback as a haven. The Reuters/Jefferies CRB Index of 19 raw materials gained as much as 4.5 percent. Last month, cotton plunged 23 percent, the most in at least 22 years, as global demand for textile products slumped.
``The weak dollar encourages short-covering,'' said Mike Stevens, an analyst with Swiss Financial Services in Mandeville, Louisiana.
Cotton futures for December delivery climbed 1.7 cents, or 3.8 percent, to 46.38 cents a pound at 11:56 a.m. on ICE Futures U.S. in New York. A close at that price would mark the biggest percentage gain since Oct. 17.
Open interest on December futures has dropped 4.8 percent to 81,633 contracts from Oct. 31, indicating the number of bets on falling prices were shrinking, Stevens said. ``The selling literally ran out after Friday,'' he said.
Still, gains may be limited because ``there's really no incentive for people to come in and buy the market,'' Stevens said.
Before today, cotton declined 34 this year.
