NEW YORK, May 24 (Reuters) - Cotton saw its largest gains
in two months on Tuesday, with new crop futures rising 5
percent from a combination of higher Chinese prices, and
drought and flooding threatening new U.S. plantings.
A bullish forecast by Goldman Sachs on oil, another
industrial commodity like cotton, also helped push up prices
for the fiber.
Cotton's new-crop, December, finished up 6.0 cents,
or 5.01 percent, at $1.2576 per lb on ICE Futures US. It was
the contract's biggest gain since March 31, when it rose almost
6 percent.
ICE'S benchmark July cotton futures were flat,
losing a fraction of a penny to settle at $1.5388 per lb.
'An assortment of factors drove the market today, from
China to the weather to Goldman, and activity largely centered
around the new crop,' said Mike Stevens, an independent cotton
analyst in Mandeville, Louisiana.
Trading volume in the December contract stood at around
7,770 lots, not far behind July's 7,920 lots.
Overall volume on ICE cotton was slightly above the 30-day
average, after falling 70 percent below the norm on Monday,
Thomson Reuters' preliminary data showed.
The market had closed down 1 percent on Monday, pressured
by a broad sell-off in commodities and an extension of the weak
demand for cotton seen since the end of last week.
In Tuesday's session, cotton futures on ICE first took
their cue from a surge overnight in Chinese cotton prices,
quoted by the Zhengzhou Commodity Exchange.
Goldman's bullish call on oil -- which raised the 2011 and
2012 target price for London's Brent crude -- gave ICE cotton a
further boost when trading opened in New York.
More support came later from weather woes in the United
States, which had been wrecking havoc on crops.
Farmers along the swollen Mississippi River have had to
contend with severe floods lately that have drowned thousands
of acres of cotton. The actual number of acres lost in both
Texas and the U.S. Delta states will not be known until the
middle of June, analysts said.
December and the back months in the cotton market are being
supported by a severe drought savaging cotton crops in Texas,
the biggest cotton growing state in the country.
