New York cotton futures extend gains

US cotton futures were up for a second straight session on Friday as raging prices of oil and other commodities pulled the fibre along for a ride. ICE Futures' open-outcry December cotton contract settled up 0.24 cent at 64.63 cents per lb, after trading between 64.00 and 65.20 cents, driven by higher crude oil, metals and agricultural prices.
On Thursday, the contract had risen 0.57 cent, helped partly by a spike in weekly sales figures of cotton released by the US Department of Agriculture. But for the most part, the cotton rally of the last two days were driven by other commodities and inflation worries caused by a steadily sinking US dollar, analysts said.
The dollar plumbed a new bottom against other leading currencies as investors fretted that an expected US Federal Reserve interest rate cut next week would not be the last. "Cotton seems to be at the mercy of other markets and unable to focus on its own supply and demand situation for other than a fleeting moment," Sharon Johnson, senior cotton analyst at First Capitol Group in Atlanta, said.
"I suspect once planting decisions are in place for next spring, the delicate balance of attempting to keep cotton in close competition with corn or beans will tip with focus returning to demand or in the case of the US, lack of demand," Johnson said. Cotton prices have been strong lately due to trade belief that US sowings for the crop in 2008 will again go down due to higher acreage given to corn and wheat.
US cotton plantings in 2007 stood at an 18-year low of 11.01 million acres. Last week, analytical firm Informa Economics was said to have forecast 2008 plantings at 9.4 million acres while the chief economist of the US Agriculture Department pegged the number at 10 million acres.
ICE Futures' March cotton, the second-most active cotton contract on the market, settled up 0.27 cent at 69.15 cents a lb. The rest rose 0.48 to 0.69 cent. The ICE December electronic cotton contract climbed 0.46 cent to 64.85 cents by 4:00 pm EDT (2000 GMT), after trading from 64.00 to 65.21 cents.