NEW YORK, Dec 20 (Reuters) - U.S. 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 U.S.
increased 4.00 cents to close at $1.5412 per lb, within sight
of the all-time record of $1.5723 hit on Nov. 10.
Since trading around $1.10 on Nov. 23, cotton futures have
increased almost 40 percent as tight supplies and strong mill
demand reignited the rally.
Cotton is the best performing commodity in the
Reuters-Jefferies commodity index, up nearly 90 percent year to
date.
(Graphic: http://link.reuters.com/kew48n)
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.'