NEW YORK, Dec 28 (Reuters) - - Cotton futures finished up and at a
three-week peak Thursday on investor short-covering although the market is on
track to be the biggest loser in the commodity sector in 2011, analysts said.
The key March cotton futures went up 0.95 cent to finish at 91.63
cents a lb, dealing from 89.53 to 92.09 cents. It was the highest settlement for
cotton's spot contract since Dec. 8, Thomson Reuters data showed.
Since scaling a record top over $2.20 a lb in early March, cotton demand has
shrunk and prices have more than halved.
Cotton is on track to be the worst performer in the commodity complex in
2011. In contrast, the market was up over 90 percent in 2010 as it was the
second best performing commodity that year.
Traded volume on Thursday was nearly 9,300 lots, over one-third under the
30-day norm, Thomson Reuters preliminary data showed.
Sharon Johnson, senior cotton analyst at commodity brokerage Penson Futures
in Atlanta, Georgia, said demand will be one of the key factors to determine if
cotton's advance can be sustained into 2012.
'We'll see if this is a flash-in-the-pan,' she said of the sustainability of
the advance into 2012. 'We definitely got some follow-through buying.'
Cotton fell early on modest profit-taking but quickly ran into support at
the day's low and sparked short-covering on the way back, dealers said.
There were also some investors buying cotton in anticipation that investment
funds would increase the share of cotton in their portfolios when reweighting of
assets getting the most funds gets underway next month, analysts said.
The trade is also wondering if lingering fears the global economic recovery
would stall and adversely impact fiber demand may undermine prices in 2012, they
said.
Total volume traded Wednesday reached 26,141 lots, up sharply from the prior
tally of 3,367 lots, ICE Futures U.S. data showed.
Open interest, an indicator of investor exposure, was at 151,818 lots as of
Tuesday, against the Tuesday level of 151,308 lots, exchange data showed.
