US cotton futures, bucking a commodity-wide selling spree, closed the daily limit up on Thursday on suspected mill and options-related fund buying in the market, dealers said. The key March cotton contract on ICE Futures US climbed the 4.00 cents limit to settle at $1.5294 per lb, with the session low at $1.4802.
It was the highest close for the spot contract in a month, Thomson Reuters data showed. Volume traded was around 19,500 lots, about 50 percent below the 30-day norm, Thomson Reuters preliminary data showed. "I think it's buying by multiple mills," Lou Barbera, a floor broker with VIP Commodities in New York, said. "I don't think they're domestic (mills)."
Mike Stevens, an independent analyst in Mandeville, Louisiana, said the market was set up to go lower Thursday in line with the weakness in other commodity markets because of strong Chinese economic data which raised the prospect of further tightening by Beijing.
"It had every reason to correct today," he said. A large order in the cotton options market quickly reversed the direction of cotton futures, which then climbed the daily limit in a matter of minutes during the session, traders said. Analysts said the market will be waiting for further leads in the coming days, but the attention in the market should gradually turn toward spring plantings.
On February 4, the market will be waiting for the closely watched cotton potential plantings survey by US industry group National Cotton Council. The results of their survey will be handed out at the annual meeting in San Diego. A Reuters survey at the Belwide Cotton conference this month had forecast US 2011 cotton plantings around 12.48 to 12.53 million acres, which would be a 5-year high and an increase of around 15 percent from last year's US cotton sowings of 11.04 million acres.