ICE cotton futures hits over 1-week high on weaker dollar, grains market boost

Jan 21 (Reuters) - Cotton prices held steady after briefly reaching an over one-week high earlier in the session, buoyed by a weaker dollar and upbeat sentiment from the grains market seeping into the natural fiber.

Cotton contracts for March CTc1 were little changed at 67.57 cents per lb at 16:58 GMT after hitting a more than one-week high earlier in the session.

The U.S. dollar index .DXY plunged 1.2%. A lower dollar makes greenback-priced cotton less expensive for overseas buyers. USD/

"The dollar is down sharply and cotton was able to rise up," said Rogers Varner, president of Varner Brokerage.

"I think that 66 cents is a solid support, but for the moment the market does not have the incentive to push above 68 cents."

In the grains market, Chicago corn futures hit a more than one-year high, with soybeans also rising on worries of a drought in Argentina and rains in Brazil. GRA/

Cotton prices are expected to remain in a range of 65 cents to 69 cents due to weaker demand, said Jack Scoville, vice president at Price Futures Group.

"We're threatening trade wars with about 3/4 of the world right now, so that's going to keep prices down."

President Trump did not immediately impose tariffs on Monday as previously promised, but said he was thinking about imposing 25% duties on imports from Canada and Mexico on Feb. 1 over illegal immigrants and fentanyl crossing into the U.S.

Adding to the upbeat sentiment, Wall Street's main indexes rose, with the blue-chip Dow at a more than one-month high, as investors assessed President Donald Trump's executive orders after taking office and awaited his first move on trade policy. .N

(Reporting by Noel John and Sherin Elizabeth Varghese in Bengaluru; Editing by Alan Barona)

((Noel.John@thomsonreuters.com))