By Elizabeth Campbell
April 6 (Bloomberg) -- Cotton futures advanced, touching the highest price in more than a month, on rising demand from traders and textile mills as the economy strengthens.
Hedge-fund managers and other large speculators increased their net-long position, or bets on rising prices, by 23 percent last month, according to Commodity Futures Trading Commission figures. Spurred by data showing the U.S. economy is recovering, the 19-commodity Reuters/Jefferies CRB Index touched a 10-week high before the gain was erased as the dollar rose.
“Good commercial buying and speculative buying” drove cotton higher, said Jeff Driver, a crop-marketing consultant with Memphis, Tennessee-based Harvest Marketing Group. “It has probably still got a little bit more room on the upside.”
Cotton for May delivery rose 0.01 cent to 82.29 cents a pound on ICE Futures U.S. in New York, after climbing to 83.17 cents, the highest price for a most-active contract since March 3. The fiber has gained 8.8 percent this year.
Prices fluctuated today, falling as much as 0.3 percent as the dollar climbed as much as 0.7 percent against a basket of six major currencies. A higher dollar reduces the purchasing power of buyers using other monies.
U.S. farmers will plant cotton on 15 percent more land this year than in 2009, the biggest increase since 1995 and the first gain in four years, the Department of Agriculture said on March 31. Acreage may get “a little bit bigger” should grain prices extend a slump, Driver said.
Corn is down 16 percent this year and soybeans have dropped 9.9 percent. The U.S. is the biggest exporter of the crops.
“There’s still a lot of people out there that think cotton is king,” Driver said.