Cotton climbed, posting its first weekly gain in almost a month, as the dollar fell and on speculation that the lowest prices in six years will attract some buyers.
The greenback dropped as much as 0.7 percent against a basket of six major currencies, making the fiber more attractive for mills holding non-U.S. currencies. Cotton futures are down 54 percent since reaching a 12-year high in March. The price on Nov. 12 reached 39.23 cents a pound, the lowest price since June 2002, after global equities tumbled and the U.S. cut its forecast for world consumption for the fifth straight month.
The dollar weakness "is good news for cotton," said Sharon Johnson, a senior analyst at First Capitol Group in Roswell, Georgia. The fiber is "grossly oversold," and "a multi-cent correction is likely" at any time, she said.
Cotton futures for March delivery rose 0.65 cent, or 1.6 percent, to 42.51 cents a pound on ICE Futures U.S. in New York. The most-active contract is up 1 percent this week, after declining for three consecutive weeks.
Cotton has plunged 46 percent since June 30 on concern a sagging economy will curb demand for cloths and textiles. The U.S. is the world's largest cotton exporter.
"With prices falling below 40 cents, the market has reached severe long-term oversold levels," Paul Reinhart AG, the Winterthur, Switzerland-based company that began trading cotton in 1788, said in a report.
Short-Lived Rally
Today's rally may not last. Prices still may fall further because of the worsening economic outlook, both Reinhart and Johnson said.
Global cotton use will drop to 119.3 million bales in the year that began Aug. 1, down from 122.3 million projected in October, the U.S. Department of Agriculture said Nov. 10. A bale of cotton weighs 480 pounds, or 218 kilograms.
China, the biggest cotton importer and largest textile exporter, made up more than half of the drop in world consumption, the USDA said.
"Cotton is hypersensitive to the current recession, and reflects an end product that is easiest for consumers to throw aside," Rogers Varner, president of Varner Brothers in Cleveland, Mississippi, wrote in a report today.
The greenback dropped as much as 0.7 percent against a basket of six major currencies, making the fiber more attractive for mills holding non-U.S. currencies. Cotton futures are down 54 percent since reaching a 12-year high in March. The price on Nov. 12 reached 39.23 cents a pound, the lowest price since June 2002, after global equities tumbled and the U.S. cut its forecast for world consumption for the fifth straight month.
The dollar weakness "is good news for cotton," said Sharon Johnson, a senior analyst at First Capitol Group in Roswell, Georgia. The fiber is "grossly oversold," and "a multi-cent correction is likely" at any time, she said.
Cotton futures for March delivery rose 0.65 cent, or 1.6 percent, to 42.51 cents a pound on ICE Futures U.S. in New York. The most-active contract is up 1 percent this week, after declining for three consecutive weeks.
Cotton has plunged 46 percent since June 30 on concern a sagging economy will curb demand for cloths and textiles. The U.S. is the world's largest cotton exporter.
"With prices falling below 40 cents, the market has reached severe long-term oversold levels," Paul Reinhart AG, the Winterthur, Switzerland-based company that began trading cotton in 1788, said in a report.
Short-Lived Rally
Today's rally may not last. Prices still may fall further because of the worsening economic outlook, both Reinhart and Johnson said.
Global cotton use will drop to 119.3 million bales in the year that began Aug. 1, down from 122.3 million projected in October, the U.S. Department of Agriculture said Nov. 10. A bale of cotton weighs 480 pounds, or 218 kilograms.
China, the biggest cotton importer and largest textile exporter, made up more than half of the drop in world consumption, the USDA said.
"Cotton is hypersensitive to the current recession, and reflects an end product that is easiest for consumers to throw aside," Rogers Varner, president of Varner Brothers in Cleveland, Mississippi, wrote in a report today.
