NEW YORK: ICE cotton futures rose on Monday on trade buying and a renewed appetite for risk from investors, after posting their biggest quarterly loss in a year.
The most-active December cotton contract on ICE Futures US rose 1.53 cents, or 1.8 percent, to settle at 85.54 cents a lb, after falling as low as 83.20 cents.
A failed attempt to push below a technical floor at 83 cents drove cotton to reverse its earlier losses, dealers said.
Fiber rose along with equities markets as investors returned to riskier assets at the start of the new quarter following the release of stronger-than-expected US and European manufacturing data.
The combination of trade short-covering and renewed investor buying lifted fiber.
"The market got too cheap in the last few days. We saw some people in the trade who didn't want to be short anymore," said Peter Egli, director of risk management for Plexus Cotton Ltd, a British-based medium-sized merchant.
Merchants' concern over upcoming supplies in the new crop year that begins Aug. 1 boosted the December contract, which represents the new crop year that begins in August.
A US Department of Agriculture report on Friday indicated that US farmers have planted their smallest cotton crop in four years, choosing to sow more lucrative grain crops instead.
Cotton prices posted two years of losses after a climb in early 2011 to their highest levels since the US Civil War prompted mills to turn to lower-priced, synthetic alternatives.
Since then, global stockpiles have grown.
A large delivery against the July contract is expected to reduce exchange stocks, which have climbed above 600,000 bales to their highest levels since June 2010. July futures expire on July 9.
The day's gains came after cotton ended the second quarter down 4 percent. Hefty losses in April and May as speculators liquidated long positions led cotton to its worst quarterly performance in a year.
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