NEW YORK: ICE cotton futures rose more than 3% to a 1-1/2 month high on Tuesday as upbeat sentiment across wider financial and commodity markets seeped into the US cotton market.

The cotton contract for March was up 3.16 cent, or 2.8%, at 116.39 cents per lb by 11:16 a.m. ET (1616 GMT), after hitting its highest since Nov. 17, 2021.

“The first thing that’s helping the cotton market is probably all of the outside markets. It looks like index funds are also buying,” said Louis Rose of Tennessee-based Rose Commodity Group.

“Demand for US cotton is decent mostly coming from China and Vietnam. Prices are getting close to the upper end range right now.”

Oil prices rose 2% as OPEC+ producers agreed to stick with their planned increase for February, while appetite for riskier assets remained strong.

Higher oil prices make polyester, a substitute for cotton, more expensive.

Chicago soybean and corn futures rose as prices were underpinned by forecasts of dry weather in South America that could hurt yields.

Meanwhile, speculators increased net long position in cotton futures by 3,151 contracts to 72,355 in the week to Dec. 28, data from the Commodity Futures Trading Commission (CFTC) showed on Monday.

The dollar index gave up earlier gains and was down 0.1% against its rivals, making cotton less expensive for other currency holders.

Total futures market volume fell by 3,760 to 10,346 lots. Data showed total open interest gained 318 to 239,896 contracts in the previous session.