NEW YORK, Sept 7 (Reuters) - Cotton futures finished Wednesday up their
daily limit at a two-month top on investment fund buying and analysts said
the momentum from the advance could well push fiber contracts higher the
rest of the week.
Benchmark December cotton contract on ICE Futures U.S. rose the
4-cent limit to close at $1.1034 per lb, with the session low at $1.0589.
It was the loftiest close for cotton since July 8.
Since mid-August, the December contract has traded at a low of $1.0174
hit on Aug. 25 and a high of $1.09 set on Aug. 24.
Volume on Wednesday was almost 13,600 lots, around 15 percent above the
30-day norm, preliminary Thomson Reuters data showed.
The market surged on both fundamental and technical factors, dealers
said.
News of floods in major cotton producer Pakistan and
the announcement by top consumer China it would start
stockpiling cotton bolstered the market. A close in the December contract
above the Aug. 24 top of $1.09 further fueled buying sentiment in fiber
contracts, traders said.
Keith Brown, president of commodity firm Keith Brown and Co in
Moultrie, Georgia, said cotton may next take out nearby resistance at $1.13
in the December contract.
'If we get over that, we're looking at $1.20 and $1.24,' said Brown.
The sensitivity in the market to China and Pakistan stemmed from what
happened there last year, market sources said.
Floods in Pakistan and poor yields in China in 2010 provided the spark
for cotton futures to embark on its historic rally to record levels above
first $1 and then $2 a lb.
Once cotton more than held its own when other commodity and financial
markets stumbled on Tuesday, the stage was set for a breakout higher, Brown
and other cotton traders said.
The market will now be looking toward the release of the U.S.
Agriculture Department's monthly supply/demand report on Sept. 12,
especially since most of the trade discounted the figure for U.S. 2011/12
cotton production in the August data as being too high.
The level of investor interest in the cotton market hit 147,827 lots as
of Sept. 5, according to exchange data.
