Light holiday volumes, with less than 7,000 March contracts changing hands on the day, exaggerated some of the upward move. Even so, fibers outperformed weak commodity and financial markets amid mounting concerns that the stalemate over the US "fiscal cliff" budget crisis could derail a tentative recovery in the world's largest economy.
"It's acting like it wants to go higher. We've been selling enough on exports. I think it will continue to work higher," said Jack Scoville of the Price Futures Group in Chicago. The buying spree continued after the latest data showed non-commercial dealers doubled their net-long position in fibers for the second straight week. In the week to December 18, their bullish bets hit their highest level in more than a year, US Commodity Futures Trading Commission data showed on Friday.
Speculative investors have bet on higher prices after a string of encouraging weekly export sales reports revealed fresh buying from China, the world's largest textile market. Traders also expect US farmers will plant much less cotton next year in favour of higher-priced grains when planting resumes in the spring. That, they hope, will help to eat into the record global surplus expected by next July. Farmers and merchants remain concerned that demand for natural fibers will continue to weaken as clothing companies switch to manmade materials. Trading will be shut on Tuesday for the Christmas holiday reopening on Wednesday.