NEW YORK: ICE cotton closed higher on Friday after buy stops and strong U.S. exports vaulted futures over their 200-day moving average to their highest since early October.
The most-active March cotton contract on ICE Futures U.S. closed up 1.23 cents, or 1.5 percent, at 84.12 cents a lb. It peaked at 85.20 cents. March's close was above its key 200-day moving average at 83.90 cents.
Fiber was the best performer among the commodities markets. Twelve of the 19 components in the benchmark Thomson Reuters/Core Commodity CRB advanced.
Global financial markets rallied as investor sentiment improved.
The U.S. dollar index fell, buoying dollar-traded commodities as it makes such goods less expensive to holders of other currencies.
Spot cotton prices finished the week higher and on track to end the year up 12 percent after posting large losses in 2011 and 2012.
USDA's U.S. cotton export sales for the week ended Dec. 19 were down from previous week, but beat expectations. USDA reported net export sales of U.S. upland cotton were 221,600 running bales for that week, down 6 percent from the previous week.
The data showed that exports have remained stout despite a 10-percent run-up in price from a November trough of 76.65 cents a lb. During the past week cotton futures were between 82 and 84 cents a lb.
"Speculators are coming in as they continue to see the strong export sales. ... The idea that the mills won't follow the market out of the 70s (cents) is wrong," said a U.S. broker.
Recent U.S. government data has shown noncommercial dealers have boosted a bullish bet in fiber, though this week's report was delayed until Monday due to the Christmas holiday.
Beijing will replace its controversial cotton and soy stockpiling programs with crop subsidies, according to a report from official Xinhua news agency that did not include a timeline for the overhaul.
Traders eye any news on China's plans to shift away from the reserve-building program launched in 2011, as it has driven voracious demand for foreign fiber and put a floor under global prices.
This week, China lowered quality requirements for reserve buying in three provinces where a natural disaster hurt crop quality and constrained purchase volumes, the China Cotton Association said on its website on Wednesday.
ICE inventories were unchanged from the previous session at 35,315 bales on Thursday, but down sharply from more than 225,600 bales at the start of the month, according to the most recent exchange data compiled by Reuters.
A sense of tight U.S. supplies due to a small crop in the world's top exporter has thrown the market into a backwardation.
A premium for nearby prices is considered unusual in a market expecting to see a record surplus by the end of the crop year on July 31, 2014, as global output continues to outstrip demand.
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