Soft futures sink on stronger dollar - Cotton falls from 11-month high

Shutterstock photo - U.S. soft futures were sharply lower during U.S. morning trade on Monday, with cotton prices coming off the highest level in almost a year as a broadly stronger U.S. dollar prompted investors to cash out of the market in order to lock in gains.

Farm commodities came under pressure from an overall weakness in other financial markets, as worries over a controversial bailout deal for Cyprus weighed on appetite for riskier assets.

The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.65% to trade at 82.89.

A stronger dollar reduces the appeal of U.S. crops to overseas buyers and makes commodities less attractive as an alternative investment.

On the ICE Futures U.S. Exchange, cotton futures for May delivery traded at USD0.9064 a pound, down 2% on the day. The May contract fell by as much as 2.6% earlier in the day to hit a session low of USD0.9005 a pound.

Cotton prices came under pressure as a round of profit taking kicked in after futures jumped to USD0.9384 a pound on Friday, the highest level since March 30.

Cotton prices have been well-supported in recent months, rallying nearly 17% since the start of the year on the back of strong demand from top consumer China and concerns over U.S. supplies.

Meanwhile, sugar futures for May delivery traded at USD0.1836 a pound, down 2.4% on the day. The May contract tumbled by as much as 2.7% earlier in the day to hit a session low of USD0.1832 a pound, the weakest level since March 7.

Prices came under pressure as traders became progressively nervous about recent gains amid the view that global supplies are more than ample to meet world demand.

Sugar prices rose to a seven-week high of USD0.1911 a pound on Friday,

The sweetener has been on a recent uptrend as shipping delays out of top producer Brazil and a move towards higher ethanol production triggered short-covering buying.

The South American country is the world's largest sugar producer and exporter, with the USDA estimating the nation accounts for nearly 20% of global production and 39% of global sugar exports.

Elsewhere, Arabica coffee for May delivery traded at USD1.3632 a pound, down 0.8% on the day. The May contract slumped by as much as 1.1% earlier to hit a daily low of USD1.3562 a pound, the cheapest level since August 2010.

Coffee prices declined as speculators pushed prices lower amid worries over sufficient global supplies.

The International Coffee Organization said last month that coffee output in Brazil and Colombia will help make up for crop losses in Central America.

Brazil is the world's largest producer and exporter of Arabica coffee, while Colombia is the world's second largest. Arabica is grown mainly in Latin America and brewed by specialty companies. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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