"Spec liquidation is probably the reason we are down today," said Louis Rose, co-founder and director of research and analytics at Rose Commodity Group. "Also, had beneficial rains across much of US cotton belt yesterday (Sunday)." The speculators reduced their bullish stance in cotton by 5,761 contracts to 15,060 contracts, US Commodity Futures Trading Commission data showed on Friday. Since late May, they have been unwinding their net long position in the commodity to the smallest since April 2016. The prices eased ahead of the US Department of Agriculture's weekly crop progress report due after market close on Monday. Weakness in the grains market and a firmer dollar also weighed on the prices, traders said. US wheat futures fell to their lowest level in more than three weeks on Monday, led by a 4.4 percent drop in MGEX spring wheat, on profit-taking as traders said damage from a drought in the US Plains had been fully priced into the market.
The dollar index was up 0.17 percent. The Thomson Reuters CoreCommodity CRB Index, which tracks 19 commodities, was down 0.24 percent. China will prepare an additional batch of 410,000 tonnes of cotton for its daily state auctions, industry website Cncotton.com reported on Monday, lending weight to expectations that state sales would be extended to ease tight supplies. "China extension is bearish short-term and bullish medium- to longer-term," Rose said. Total futures market volume fell by 9,766 to 12,972 lots. Data showed total open interest fell 1,484 to 215,981 contracts in the previous session.