Cotton rises to near 1-week peak on lower dollar, strong grains

Feb 4 (Reuters) - ICE cotton prices rose more than 1% to their highest level in nearly a week on Tuesday, supported by a weaker U.S. dollar and upbeat sentiment from the grains market seeping into the natural fiber.

Cotton contracts for March CTc1 rose 0.72 cent, or 1.09%, to 66.76 cents per lb at 10:49 a.m. ET (1549 GMT), after it fell to its lowest level since October 2020 on Monday.

"The U.S. dollar is turning down. We're also into that seasonal time when we're getting ready to harvest the South American crop and they're seeing some weather adversities down there," said Keith Brown, principal at cotton broker Keith Brown and Co in Georgia.

The U.S. dollar edged lower as President Donald Trump's tariff threats were interpreted more as a negotiating tactic rather than an end goal, a day after he suspended planned measures against Mexico and Canada. USD/

A weaker dollar makes greenback-priced cotton more cheaper for overseas buyers.

Chicago corn future contracts for March were up 1.6% after the suspension of planned U.S. tariffs against Mexico, the biggest importer of U.S. corn.

A reduction in cotton planting in the northern hemisphere of the U.S. is expected to drive cotton prices higher in the near future, Brown said.

Elsewhere, the S&P 500 and the Nasdaq gained as megacap stocks stabilized despite ongoing market volatility following China's counter tariffs in response to new U.S. trade restrictions. .N