By Catarina Saraiva Dec. 18 (Bloomberg) -- Cotton prices fell to the lowest price in four days as the dollar’s rebound eroded demand for commodities as alternative investments. The dollar rose against a basket of six major currencies, extending a rally to a three-month high. Cotton has climbed 54 percent this year as unusually heavy rainfall damaged crops and hampered harvesting across the U.S., the world’s biggest exporter. “The dollar has put a lot of markets playing defense,” said Keith Brown, the president of Keith Brown & Co., a broker in Moultrie, Georgia. “If the dollar maintains strength in the first part of the year, certainly it could weaken cotton.” Cotton futures for March delivery dropped 0.46 cent, or 0.6 percent, to 75.28 cents a pound on ICE Futures U.S. in New York, after touching 74.5 cents, the lowest price since Dec. 14. for the week, cotton rose 1.3 percent. Cotton for March delivery has “gained” on the December 2010 contract, indicating investors are concerned that supplies will tighten next year, Brown said. “It signals a dynamic in the market, improving demand and lessening supplies,” Brown said. Cotton futures for December 2010 delivery gained 0.13 cent, or 0.2 percent, to 76.13 cents, narrowing the spread with the March contract to 0.85 cent, compared with 3.8 cents a month ago. To contact the reporter on this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net.

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