Cotton futures drop more than 3% to two-month low on seasonal selling

Sept 29 (Reuters) — ICE cotton futures fell more than 3% to a two-month low on Tuesday as seasonal selling pressure weighed on the market, while a stronger US dollar, supported by rising Treasury yields, added to the bearish tone. m. ET (1359 GMT), after touching its lowest level since July 30 earlier in the session. "This is the time of year that cotton prices tend to decline anyway (due to seasonal pressure).

Historically, 8 out of 10 years, the market tends to make annual lows in October, November, December," said Keith Brown, principal cotton broker at Keith Brown and Co in Georgia. S. Treasury yields," which is also pressuring cotton, Brown said. The dollar rose, testing several-month highs against major peers, underpinned by volatile oil prices and a recent rapid climb in Treasury yields.

USD/ US/ Markets currently see a 70% probability of a Fed rate hike in October and a 95% chance of an increase in December, according to the CME's FedWatch Tool. "We're coming into the end of the month and end of the quarter, so there's a lot of position squaring and adjusting. I think the heavily long funds are liquidating their position," Brown added. Fund liquidation can pressure cotton prices as investors unwind bullish positions during end-of-month and quarter-end portfolio adjustments.

Meanwhile, oil prices declined as investors focused on signs of recovering crude exports from the Middle East and lingering concerns over potential supply disruptions in the region stemming from the US-Israeli war on Iran. O/R Lower energy prices can make polyester, a cotton substitute, cheaper to produce, reducing cotton's price competitiveness. com;)