US cotton futures rose on Friday, as bargain hunting by cotton mills and short-covering by investors lifted the fibre market from a five-year low after three days of declining prices. The most-active December cotton contract on ICE Futures US finished up 0.4 cent at 63.27 cents a lb. The session low was 62.02 cent, the lowest since October 2009 for a benchmark second month contract in US cotton on a continual basis.
December cotton has lost 33 percent over the past two months as investors dumped futures on fears of excess supply. "We're getting to a point where the mills are stepping up to buy fibre here," said Jack Scoville, vice president at Price Futures Group in Chicago. 'If you've been short for a while, you're taking some money off the table here," he said.
The market has slid steadily since the US Department of Agriculture projected last month that US cotton stockpiles will climb to a six-year high of about 5 million bales by the end of the 2014/15 crop year. The USDA has also forecast that global inventories will swell to a record of nearly 106 million 480-lb bales. Sharon Johnson, a cotton specialist with KCG Futures in Georgia, said that December contract's drop to 62 cents prompted participants to buy back their bearish bets. Johnson also attributed Friday's gain to strong export sales data reported in the previous session.
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