Forexpros - Cotton futures were up for a second day on Wednesday, soaring to a two-week high as buying from small investors amid thin trade conditions resulted in exaggerated moves to the upside.
On the ICE Futures U.S. Exchange, cotton futures for March delivery traded at USD0.9065 a pound during European afternoon trade, surging 3.1%.
It earlier rose by as much as 3.15% to trade at USD0.9067 a pound, the highest since December 12.
Trading volumes were expected to remain light following the Christmas break, as many traders have closed books before the end of the year, reducing liquidity in the market and increasing the volatility.
Volume traded Tuesday was almost 85% under the 30-day average, resulting in exaggerated moves.
Global financial service provider Commerzbank said in a report Tuesday that it expected cotton prices to average USD1.10 a pound in the second half of 2012, citing increased purchases from top consumer China.
Meanwhile, prices were expected to remain under pressure after U.K.-based industry research group Cotlook said on Tuesday that the global cotton surplus in the 2011-12 marketing season was expected to total 4.09 million tons, compared to a previous estimate of a 0.76 million surplus.
According to the group, global cotton production was expected to grow 10.9% from a year earlier to 26.80 million tons in 2011-12 marketing season, up from 24.17 million tons in 2010-11.
Worldwide consumption on the other hand was expected to decline to 22.71 million tons in 2011-12, down 3% from 23.41 million tons in the previous season.
This year, the fiber has plunged 39%, the most since 2004 and on track to be the worst performing commodity market for 2011. Cotton prices have plummeted nearly 60% since hitting a record high of USD2.197 a pound on March 7.
Meanwhile, commodity prices received a lift as risk appetite staged a modest recovery after Italy saw borrowing costs fall sharply at an auction of short-term government debt earlier.
Despite the upbeat results, ThursdayΆs sale of EUR8.5 billion of long-term Italian debt maturing between 2014 and 2022 was seen as a bigger test of market confidence in the countryΆs sovereign debt.
Elsewhere, on the ICE Futures Exchange, coffee futures for March delivery dipped 0.21% to trade at USD 2.2222 a pound, while sugar futures for March delivery added 0.45% to trade at USD0.2379 a pound.
