NY cotton finishes higher on spec short-covering

NEW YORK: Cotton futures settled higher Thursday on investor short-covering and possible consumer buying as the market finally raced past a four-day trading band and could move up on follow-through purchases next week.

The key December cotton contract on ICE Futures US jumped 2.69 cents, or 2.7 percent, to finish at $1.0222 a lb, dealing between 98.21 cents and $1.0317.

Over the preceding four sessions, the cotton market's December contract has traded in a range running from 99 cents to $1.023.

Total volume traded on Wednesday hit almost 15,000 lots, nearly a quarter above the 30-day norm, preliminary Thomson Reuters data showed.

"You've got end-of-the week, end-of-the-month and end-of-the-quarter buying," said independent cotton analyst Mike Stevens in Mandeville, Louisiana.

He said the close above the $1.02 region meant fiber contracts should enjoy further follow-through buying on Friday and possibly into next week.

Traders said there was some encouragement from the perkier tone of outside financial markets.

Upbeat economic news from the United States and a stronger euro-zone bailout fund lifted investor sentiment. Oil and gold prices were also up.

The next target for cotton would be the $1.04-$1.09/lb zone, an area from which the market broke down recently.

The amount of investor interest in cotton remained weak as open interest stood at 147,974 lots as of Sept. 28, up slightly from 147,611 lots on Sept. 23, the exchange said.

Total volume traded Wednesday in the cotton market reached 10,204 lots, versus the previous session's count at 11,154 lots, ICE Futures US data showed.

Copyright Reuters, 2011