By Ilena Peng 

(Bloomberg) -- Cotton futures surged by the most since February as severe weather risks and a lower production outlook led traders to cover bearish bets, pushing prices higher.

The most-active contract rose as much as 4.3% in New York to 72.82 cents per pound, the highest intraday price in two months. Money managers — whose short bets are near a record in statistics going back to 2006 — are covering positions amid a “perfect cocktail of supply and demand data,” said Walter Kunisch, a senior commodities market strategist at Hilltop Securities Inc.

The impact of Hurricane Francine, which swept through southern states last week, dryness in the world’s biggest exporter Brazil and a weaker US dollar are all supporting prices, Kunisch said.

Another storm threatening the Carolinas is also presenting a risk to crops ahead of defoliation, when leaves are removed from plants to prepare for harvest, said Louis Barbera, a managing partner at VLM Commodities.

While the storm would pose a bigger threat to cotton quality than quantity, hurricanes “always make sellers pull back,” Barbera said.

Meanwhile, the US Department of Agriculture on Friday cut its 2024/25 outlook for US and global cotton production. US output was revised as yields were cut to 807 pounds per acre, the lowest since 2015. Overall global production was reduced on lower output in the US, India and Pakistan, according to the USDA.

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