US cotton futures rose more than 1 percent to a two-week high on Wednesday on gains in prices for other commodities, while strength of global demand and economic sentiment will likely start setting the market tone, traders said. Cotton closed near its session high at 71.85 cents a lb, which marked the loftiest price since October 31. The 50-day moving average near 73 cents will likely to serve as technical resistance in the near term, analysts said.
Cotton prices remained sharply below the six-month high near 80 cents, reached in mid-October, as worries over world demand and economic uncertainty continued to pressure the agricultural commodity, traders said. "We believe the market has reached a level of fundamental support just above the global demand structure," INTL FCStone strategists said in a note.
"A movement away from the demand will bring additional producer hedging in volumes and keep the market in the same basic trading ranges for months to come," they said. The most-active December cotton contract on ICE Futures US settled up 82 cents at 71.63 cents with volume almost 10 percent above its 250-day average, preliminary Reuters data showed.
The contract has traded in a tight range between 69 and 79.2 cents in the last six months. Cotton's gain came as grain futures rose, with export sales and stronger-than-expected crushing demand boosting soybeans after sharp losses earlier this week. The outlook for cotton production and inventories was downbeat. The US Department of Agriculture raised its inventory forecast for the current season to more than 80 million 480-lb bales for the first time since records began in 1960. With the US harvest in full swing, exchange stocks continued to rise, increasing to 22,887 bales from 21,448 bales, according to ICE data.