NEW YORK, Aug 30: NY cotton futures closed at a one-month high Friday on steady bouts of speculative fund buying, with analysts saying the market should work its way up given the rosy fundamental outlook.

The market uncorked its rally before a holiday weekend. The market is shut Monday for Labour Day.

Trading resumes Tuesday at the new trading facilities for the exchange in downtown Manhattan. The New York Board of Trade has been using a backup pit since its exchange was destroyed in the Sept 11, attacks.

Key December cotton surged 0.82 cent to close at 59.18 cents a lb, trading from 58.50-59.34 cents. It was the highest close for benchmark cotton prices since trading around 59-60 cents in late July. March added 0.66 to 61.36 cents. Distant months jumped 0.50-1.48 cents.

Frank Weathersby, broker for Affinity Trading in Fort Walton Beach, Florida, said a searing drought in top cotton grower Texas and a late crop across the US cotton belt meant the fundamental picture is “looking stronger” this season.

He believes the key December cotton contract will eventually make a run at 60 cents or higher.

Analysts said there was also talk that China would be facing a supply deficit in excess of 1.0 million tons of cotton and that this would filled by a combination of imports and by tapping domestic stocks.

Market analyst O.A. Cleveland said in his weekly outlook that cotton prices may encounter resistance near the 60 cents level. But international prices should hold and, thus, allow New York futures to breach 60 cents, basis December, he said.

End-of-the-month short-covering enabled cotton to stay in positive ground for most of the day.

It’s fund buying running into good trade selling, said Weathersby.

Technicians said resistance in the December cotton contract was pegged at 59.20 and 59.80 cents, with support at 58.85 and 58.15 cents.

Final estimated volume stood at 11,000 contracts, versus the prior tally of 7,592 lots. Open interest in the cotton market fell 219 lots to 63,576 lots as of August 28. —Reuters