ICE cotton futures rose over 1 percent on Monday as an improved technical picture and hopes of a positive outcome from US-China trade talks, pushed speculators to cover their short positions.
The front-month cotton contract on ICE Futures US, settled up 1.15 cent, or 1.50 percent, at 77.73 cents per lb.
It traded within a range of 76.17 and 77.77 cents a lb.
"The market is moving back through some key moving averages and chart points. The trade negotiations seems to be moving forward and with that the fundamentals seems positive," said John Mitchell, chief executive at Choice Cotton.
"Speculators had put in a lot of short positions over the past few weeks. They don't have a lot of profit. So, it is easy to get them out of those positions as the market moves through those chart points."
Speculators had cut back their bearish stance on cotton futures and options in the week to March 19, data from the US Commodity Futures Trading Commission showed.
Prices broke through the key 100-day moving average last week. Speculators who trade on technical signals regard a break above the 100-day moving average as a bullish sign.
"ICE cotton futures continue be mostly influenced by evidence and rumors of demand for raw cotton and by trade negotiations between the US and China," said Louis Rose, director of research and analytics at Tennessee-based Rose Commodity Group.
"(That) has likely forced further speculative short-covering."
United States Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will travel to Beijing for talks scheduled to start on March 28, while a Chinese delegation led by Vice Premier Liu He will visit Washington next week, the White House said on Saturday.
Total futures market volume rose by 248 to 33,567 lots. Data showed total open interest gained 1,729 to 225,036 contracts in the previous session.
Certificated cotton stocks deliverable as of March 22, totalled 50,547 480-lb bales, down from 59,070 in the previous session.