Cotton futures settled higher Tuesday on investor short-covering as the market climbed for the third straight session after sinking last week to a 14-month low, analysts said. The key December cotton contract on ICE Futures US rose 1.74 cents to end at 99.68 cents per lb, dealing from 97.57 to $1.0063. Last Thursday, the contract fell by almost 3 percent to end at 96.86 cents in the lowest settlement for the spot contract since September 2010.
It was the first time in almost four weeks the December contract broke a trading band ranging from 98 cents to $1.04. Total volume traded Tuesday hit over 23,000 lots, about two-thirds over the 30-day norm, preliminary Thomson Reuters data showed. "Once you ran out of gas on one end, you try the other end," said Mike Stevens, an independent cotton analyst in Mandeville, Louisiana.
The market hit an intra-session low of 96.47 cents, basis December, last week and has not violated that level since. There was trade buying on the way down and many speculative accounts were short in cotton, setting the stage for a short-covering advance, dealers said.
There was also some cautious optimism in the market about a possible resolution to the European debt crisis although a cancellation of European finance ministers meeting raised doubts and caused world stocks to fall. Open interest in cotton, usually taken as an indicator of investor exposure in cotton, stood at 158,624 lots as of October 24, its highest level since June 9. On Monday, open interest stood at from 157,290 lots, the exchange said. Total volume traded Monday in the cotton market reached 13,055 lots, against the prior tally of 15,069 lots, ICE futures US data showed.
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