Cotton futures rose on Tuesday in subdued, rangebound trade, bolstered by strength in outside markets. The most-active December cotton contract on ICE Futures US closed up 0.8 cent, or 1.3 percent, at 64.47 cents a lb. Strong grains prices and rallying financial markets helped lift fibre. US soybean futures hit a nearly two-month high. Rising soybean prices can trigger strength in cotton, which competes with the crop for acreage in key US growing regions.
Strong global equities markets and an upbeat US consumer confidence report also fuelled fibre's gains. That strength can lead to greater demand for consumer goods, including apparel. "There's nothing specific to (cotton) fundamentals. With the dollar down and grains and stocks higher, speculators who are short are taking cover," said Sharon Johnson, a cotton specialist with KCG Futures in Georgia. The US dollar index fell, lifting greenback-traded commodities as it makes them less expensive to holders of other currencies.
Monday's weekly US Agriculture Department progress report showed harvesting has ramped up in the world's largest exporter. Some 42 percent of US acres had been harvested in the week ended October 26, up from just 29 percent a week earlier and higher than the prior five-year average of 41 percent. Farmers in the United States and India, two of the world's three largest producers, boosted acreage this year after prices rose in 2013.
That boost, combined with falling demand in top consumer China, is expected to keep prices under pressure. They hit five-year lows last month as Beijing unveiled details of its new cotton policy, expected to sharply curb import demand in 2015. China's government has switched to a direct farmer payment program, scrapping three years of stockpiling that had boosted demand for imports.