US cotton futures finished Monday the daily limit up at a one-month top on light fund and speculative buying, with the market poised to hit a new record high due to tight supplies, analysts said. The key March cotton contract on ICE Futures US increased 4.00 cents to close at $1.5412 per lb, within sight of the all-time record of $1.5723 hit on November 10.
Since trading around $1.10 on November 23, cotton futures have increased almost 40 percent as tight supplies and strong mill demand re-ignited the rally. Cotton is the best performing commodity in the Reuters-Jefferies commodity index, up nearly 90 percent year to date.
The volume of business though was very light. Total volume traded was around 9,500 lots, over two-thirds below the 30-day average at 31,500 lots, Thomson Reuters preliminary data showed. Jobe Moss, a cotton analyst for brokers and merchants MCM Inc in Lubbock, Texas, said speculative and fund accounts hoisted cotton higher.
But dealings were "slow," said Moss. The dearth of producer and trade sellers gave market bulls free rein in pushing futures higher, he added. The market may have also received a boost from higher Chinese cotton prices, with the May contract on the Zhengzhou Commodity Exchange last traded 520 yuan higher on the day at 28,360 yuan per tonne. Traders said the market's level of business would remain modest with the Christmas and New Year holidays looming. But the outlook is fundamentally strong, analysts said. Jack Scoville, an analyst for brokers The Price Group, said in a report cotton is moving higher on "new demand and no nearby supply. The underlying fundamental support of strong demand is now likely to continue as cotton is still needed here and in other countries as well."
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