Cotton futures recovered from a three-week low on Tuesday as the price dip sparked mill buying and stop-loss orders exaggerated gains. The most-active December cotton contract on ICE Futures U.S. rose 0.5 cent, or 0.8 percent, to settle at 62.79 cents a lb after dipping to 62.10 cents, the weakest level for the contract since early October. Prices jumped as much as 2.2 percent on buy-stops.
"We got low enough to get some business done," said Sharon Johnson, a cotton specialist with KCG Futures in Georgia. Demand has been subdued, even as prices hover near five-year lows. Cotton has been under pressure for speculator selling and worries over weak demand in top consumer China as Beijing overhauls its crop support program. The benchmark contract hit a five-year low below 61 cents a lb late last month as Beijing began releasing more details on its plans to curb imports and offer direct payments to farmers.
China imported 122,900 tonnes of cotton last month, a 39-percent plunge from September 2013, according to a report this week. Harvest pressure as farmers in the United States and India, both key growers, has also weighed. India is expected to produce a record 40 million bales this season, the government said this month. Weekly U.S. Agriculture Department (USDA) data published after the market close on Monday showed domestic harvest progress picked up in the most recent reporting week, but was still behind the prior five-year average.
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