NEW YORK (December 19, 2010) : US cotton futures rose nearly 3 percent to settle at a one-month peak and near record highs on Friday as speculators plowed into the market on the notion it had run out of new supply in the near-term. "Basically, the projection is that there's very little cotton, if any, to be delivered into the March contract," said Mike Stevens, an independent cotton analyst in Mandeville, Louisiana.
"It's not a new story, but one that is driving this market until we find a way to ration or reduce the demand." But some think cotton could actually fall in the coming week, ending a three-week run-up, if investors decide to take profit ahead of Friday's pre-Christmas holiday.
"Next week is a short week longs may decide to cash in," said Sharon Johnson, senior cotton analyst at commodity brokers Penson Futures in Atlanta, Georgia. The key March cotton contract on ICE Futures US settled up 4.0 cents, or 2.7 percent, at $1.5012 per lb. That took the market to its highest level since November 10, when it hit a record peak of $1.5195.
Cotton has been the best performing commodity in the Reuters-Jefferies commodity index, up over 80 percent year to date. For this week, March cotton was up 10 percent, extending its 22 percent gain from two previous weeks. If supply fears continue, cotton could rally to a new record above $1.60 a lb with some intermittent profit-taking, independent analyst Stevens said. "I'm shooting darts in the dark here, but this is very possible," he said. "You're talking about a market that's doubled in price over the last six months.
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