NEW YORK, Dec 31: Cotton futures settled higher Friday as late speculative short-covering and window dressing for the end of 2005 gave the market a boost and analysts feel this will likely spill over into the next year.

The cotton market shut 75 minutes early on Friday at 1:00 p.m. EST (1800 GMT). The market is closed Monday for New Year and trading resumes on Tuesday.

The New York Board of Trade’s key March cotton contract rose 0.54 cent to end at 54.19 cents a lb, moving from 53.07 to 54.25 cents. May added 0.36 to 54.70 cents. The rest increased 0.15 to 0.35 cent.

On the spot daily charts, cotton prices rose 21.04pc from its finish at the end of 2004 at 44.77 cents.

Demand is good and consistent, said Frank Weathersby of brokers Affinity Trading in Fort Walton Beach, Florida, when asked to account for cotton’s recent strength. He added this should continue encouraging investors to play cotton on the long side going into 2006.

Brokers Flanagan Trading Corp. said in a daily report the close reflects the tremendous increase in demand for cotton over 2005, enough to absorb this year’s second record crop.

Futures edged higher from the opening bell, slumped to its low for the session but speculative accounts turned it around going into the close of trade, dealers said.

Weathersby said speculators will persist in probing the top end of cotton’s recent range from 52.50 to 54.50 cents to see if automatic computer-generated orders can be touched off and power fiber contracts higher.

Floor dealers said estimated final volume amounted to 12,000 lots, from the prior tally of 12,070 lots. Open interest rose 2,256 lots to 106,963 contracts as of December 29.—Reuters