ICE cotton futures rose nearly 1% to a seven-month high on Thursday, helped by fund buying on optimism surrounding the US-China trade deal.

Cotton contracts for March rose 0.60 cent, or 0.87%, at 69.65 cents per lb by 01:00 p.m. EST (1800 GMT).

They rose to 69.74 cents earlier in the session, a level last seen on June 4.

“The general trend is higher – prices are up nearly 70 cents. It's been really since this thing all cascaded lower in May 2019 when the trade deal fell apart. The market has simply retraced that," said John Payne, senior broker at Daniels Trading.

“Funds are putting their money back into the cotton market right now. The trade war is essentially over for now and we are seeing money put back to work."

On Tuesday, US President Donald Trump said that Phase 1 of trade deal with China would be signed on Jan. 15 at the White House, though considerable confusion remains about the details of the agreement.

ICE cotton speculators switched to a net long position of 3,916 contracts in the week to Dec. 24, adding 7,875, data from the US Commodity Futures Trading Commission showed.

US stocks extended their rally into the new year, with all three major indexes hitting record highs on Thursday.

The US Department of Agriculture will release the weekly export sales report on Friday, delayed due to the New Year holiday.

Last week, the USDA in its weekly export-sales report showed net sales of 135,100 running bales (RB) for the 2019/20 marketing year, down 44% from the prior four-week average for the period ended Dec. 19.

Total futures market volume fell by 1,525 to 20,126 lots. Data showed total open interest fell 1,054 to 221,797 contracts in the previous session.

Certificated cotton stocks deliverable as of Dec. 31 totaled 9,127 480-lb bales, down from 9,221 in the previous session.