Cotton Falls as Dollar Gain, Slowing Economy May Reduce Demand

By Shruti Date Singh

Aug. 15 (Bloomberg) -- Cotton fell, heading for a third straight weekly drop, on speculation that a weaker economy will slow demand for textiles and clothing as a stronger dollar makes the commodity more expensive for buyers using other currencies.

U.S. retail sales fell in July for the first time in five months, the Commerce Department said this week. The U.S. Dollar Index, a six-currency gauge that includes the euro and yen, rose for the 11th session to the highest level since January. The Reuters/Jefferies CRB Index fell as much as 0.9 percent.

``The dollar rising is generally not good for commodities,'' said Andy Ryan, a risk-management consultant at F.C. Stone LLC in Nashville, Tennessee. ``It's across-the-board selling. It's larger concerns about the economy in general.''

Cotton futures for December delivery fell 0.58 cent, or 0.8 percent, to 68.9 cents a pound at 9:59 a.m. on ICE Futures U.S., the former New York Board of Trade. A close at that price would mark a 0.4 percent drop for the week and leave cotton down 12 percent since the end of June.

To contact the reporter on this story: Shruti Date Singh in Chicago at ssingh28@bloomberg.net.