NY cotton gains most in 14 mos, commodities rally

Thu Jun 7, 2012 1:56am IST

* Cotton posts biggest one-day percentage increase since
April 2011
    * U.S. equities jump on signs of a deal to rescue Spanish
banks
    * Short cover buyers rush in on the first sign cotton has
rebounded

    June 6 (Reuters) - U.S. cotton futures surged on Wednesday
for their biggest daily percentage gain since April 2011,
rallying initially with other commodities and U.S. stock
markets, then pushing to their four-day high as investors
covered short positoins, brokers said.	
    U.S. equity markets rose as signs of urgent moves in Europe
to rescue Spain's troubled banks sparked a rebound in
beaten-down shares, pushing the broad S&P 500 index through a
key resistance level. 	
    In the commodities sector, metals, energy, grains and other
softs markets pushed the global benchmark Thomson
Reuters-Jefferies CRB index up 1.25 percent. 	
    "Today's market is truly a rising-tide-lifts-all-boats kind
of market," said Mike Stevens, an independent cotton analyst in
Mandeville, Louisiana.   	
     Commodities posted their biggest rebound in more than three
months, also on growing hopes for a solution to the euro zone
crisis and a stimulus measure for U.S. growth. 	
    The CRB's biggest gain since Feb. 21 was won as a rising
euro made dollar-denominated raw materials, including cotton,
cheaper for users of the single currency.	
    Short-cover buying spurred cotton prices to session highs,
where the contracts closed, a day after falling near a 3-year
low for the third consecutive session in the face of bumper
supplies and a weak global economic outlook.	
    Now-benchmark December cotton on ICE Futures U.S.
surged 3.00 cents, or 4.59 percent, to end at 68.36 cents per
lb, its four-day peak. Contract volume was a hefty 17,092 lots. 	
    On Tuesday, December futures finished at its lowest close
for the third position cotton contract since early October 2009.	
    Spot July cotton surged 3.00 cents, or 4.48 percent,
to close at the 69.89 cents a lb high. 	
    Both contracts posted their biggest one-day percentage gains
since April 2011. 	
    Jobe Moss, broker at MCM Inc in Lubbock, Texas said he
thought most buyers were holding to the sidelines as prices
tumbled almost 22 percent during May and early June.	
    With Wednesday's surprise advance, he added that a near or
medium-term bottom had likely been established, and absentee
buyers would should begin returning to the market in coming
days. 	
    Moss also noted, however, that rollovers out of July
contracts into new-crop December futures would likely begin in
earnest on Thursday when Goldman Sachs starts the process with
its large holdings of cotton futures. 	
    Open interest, an indicator of investor interest, fell by
2,067 lots to 201,644 lots on June 5, a day after rising to
their loftiest level since Feb. 10, 2011, when open interest was
at 220,096 lots, ICE data showed.	
    Wednesday's volume came to 32,600 lots, about 37 percent
over the 30-day norm, Thomson Reuters data showed.	
	
 (Reporting by Carole Vaporean; Editing by David Gregorio)
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