NEW YORK, March 1: NY cotton futures rallied to a strong finish Friday on robust speculative buying which hit stops, with some operators saying cotton may head higher despite a hefty long position held by funds in the market.

Spot March jumped 1.14 cents to end at the session high of 48.99 cents a lb, with the session low at 48 cents.

Active May shot up 1.48 cents to close at 58.29 cents, moving from 57 to a new lifetime peak of 58.40 cents.

The rest climbed between 0.12 cent and 1.35 cents.

The trend is up and we’re going up,” said Keith Brown, president of commodity trading firm Keith Brown and Co. in Moultrie, Georgia.

Sharon Johnson, cotton expert for Frank Schneider and Co. Inc. in Atlanta, said speculative buying was driving the market north even though the volume of business was not that heavy.

With specs as long as they are, panic buying by the trade could push prices up 2-4 cents, but probably not by more than that as producers would increase their level of selling and expand acreage into this spring, she said in a report.

Futures popped higher at the onset of business and despite attempts by some players to cash in their gains, speculative players ran the market up, floor sources and brokers said.

Once May penetrated nearby resistance at 58 cents, buy stops kicked in to power fiber contracts to lifetime highs, they said.

Market analyst O.A. Cleveland said in a weekly report that the rally should be able to sustain itself.

The May contract should be move to at least 62 cents, and most probably higher. Likewise the new crop December contract will ride May’s coattails higher, he said.

Traders said the market began running into more aggressive trade selling at the highs, paring its robust end-of-the-month advance.

The market took note of news that William Dunavant Jr., chief executive of top merchant Dunavant Enterprises, had pegged US 2003/04 cotton production at 17.7 million to 17.8 million (480-lb) bales, up slightly from the USDA projection of US 2002/03 cotton output at 17.14 million bales.

Technically, dealers said they see resistance in the May contract at 58.80 and 59.30 cents, with support at 58.10 and 57.50 cents.

Floor sources said estimated volume stood at 9,000 lots, versus the prior tally of 6,678 lots. Open interest in the cotton market fell 982 contracts to 88,624 lots as of Feb. 27.—Reuters