Cotton futures rose two percent on Wednesday and surged to a near six-month high, buoyed by fund buying and expectations of rise in purchases ahead of the expiry of March contract fixation. The March cotton contract on ICE Futures US hit a session high of $76.56, the highest since August 9.
"The funds have pushed the prices up... Buyers and mills who have bought cotton but not fixed a price have got until February 21 (to fix the prices)," said Jobe Moss, a broker with MCM Inc in Lubbock, Texas.
"If buyers of physical cotton have not fixed the price, they will have to step in and settle the contract," Moss added. The market has also been supported by the recent demonetization drive in major producer India, following which growers were unable to sell the crop due to a scarcity of cash, Moss said.
The March cotton contract on ICE Futures US settled up for the second straight day. It rose 1.5 cent, or 2.00 percent, at 76.44 cents per lb. The prices traded within a range of 74.91 and 76.56 cents a lb.
Total futures market volume rose by 15,046 to 45,232 lots. Data showed total open interest gained 2,435 to 276,602 contracts in the previous session. The Thomson Reuters CoreCommodity CRB Index, which tracks 19 commodities, was up 1.20 percent.
The US export sales data from the US Department of Agriculture is due on Thursday.