NEW YORK: ICE cotton rose on Thursday after weekly U.S. government data showed Chinese buyers purchased the most bales since January, easing worries over slowing demand in the world's top consumer and reinforcing concerns over tight nearby U.S. supplies.
The second-month July cotton contract on ICE Futures U.S. closed up 0.56 cent, or 0.6 percent, at 93.20 cents a lb after setting a 3-1/2-week high of 93.52 cents.
Total open interest fell to 169,443 lots on Wednesday, down by almost 5,400 lots from the previous session to the lowest level in over a month, ICE data showed on Thursday.
The sharp drop was seen as evidence of long liquidation that pressured prices to Wednesday's one-week low.
U.S. exporters booked 124,100 running bales of upland cotton in the week ended April 17, U.S. Agriculture Department (USDA) data showed on Thursday.
That was the most sales to China since late January, according to government data reviewed by Reuters.
While traders expected that number, including price-setting for bales previously booked on-call, it was still seen as strong and eased worries over the impact of recent high prices and lower demand in China as Beijing tries to whittle down huge state reserves.
China is overhauling the controversial government stockpiling program it launched in 2011 that has driven strong import demand.
The strong sales supported traders' worries over tight nearby U.S. supplies, after farmers in the world's top exporter produced fewer bales than forecast in the current 2013/14 crop year that runs through end-July.
"People are worried there won't be enough supplies come July," said Ron Lawson, a partner at commodity investment firm LOGIC Advisors in California.
Those concerns lifted prices to two-year highs around 97 cents a lb last month.
Exchange data showed no bales were booked for physical delivery against the May contract on the first day of the notice period.
The May ICE contract, which is due to expire on May 7, eased 0.24 cent, or 0.3 percent, at 92.66 cents a lb after rallying 2 percent on Wednesday.
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