Cotton prices up after dollar weakens and short covering

ICE cotton prices finally reversed course on Friday, snapping a five-week losing streak. A weaker US dollar and short-covering by traders resulted in the rally. The July contract jumped 244 points to settle at 78.06 cents per pound, the highest gain in recent weeks. This price increase came despite a down week overall, with cotton losing 134 points. However, the gains on Friday helped offset some of those losses.

A weaker dollar made US cotton more attractive to foreign buyers, prompting some traders to close out bets that prices would continue to fall (short positions). This "short-covering" added to the upward pressure.

Positive economic data and a slightly lower oil price also contributed to the positive sentiment for cotton. Additionally, concerns about lower quality cotton from Brazil due to bad weather could lead buyers back to the US market, further supporting prices.

Trading volume picked up slightly on Friday, and certified cotton stockpiles remained mostly unchanged. The outlook for cotton prices hinges on developments in Brazil's crop quality and future movement of the US dollar.