"Today's increase was a bit of a tiny correction after Friday's loss. I won't read much into it. The volume was pretty low as compared to what it has been when prices rallied," said Gabriel Crivorot, an analyst at Societe Generale in New York. "The dollar index bounced back a bit which gave cotton a bit of headwind," he added.
The dollar rose on Monday to a more than one-week high against a basket of major currencies, helped by a pullback in the euro as investors took profits after the common currency's recent rally. Cotton futures on Friday rose above the key 80-cent level for the first time since June 2014, but prices settled about 1.5 percent lower as traders booked profits.
Dealers raised their bullish bet in cotton by 1,218 contracts to 99,537 contracts in the week to January 2, US Commodity Futures Trading Commission data showed on Friday. Meanwhile, total futures market volume fell by 8,247 to 31,280 lots. Data showed total open interest gained 893 to 286,319 contracts in the previous session. Certificated cotton stocks deliverable as of January 5 totalled 47,665 480-lb bales, unchanged from the previous session.