NEW YORK, Feb 23: Cotton futures closed at a four-year high for the second straight day Friday, on follow-through speculative buying with additional support from a bullish government report, brokers said.

It seems to be more interest from the specs than from the trade. It’s more technical buying than fundamental. I think the funds will follow through (on Monday) for technical reasons,” said Frank Weathersby of Affinity Trading in Florida.

ICE Futures’ open-outcry March cotton contract finished 2.39 cents higher at 75.62 cents per lb, while May cotton closed up 0.85 cent at 75.81 cents, a four-year high for the second position dating back to January 2004. The new-crop December cotton contract rose 0.82 cent to 81.76 cents. All contracts set lifetime highs.

The May electronic cotton contract was trading 0.83 cent higher at 75.79 cents at 3:04 p.m. EST (2004 GMT), in dealings from 75.28 to 77 cents.

US cotton stocks will be extremely tight this year, which will likely push prices higher and could crimp exports, analysts said Friday in reaction to new USDA forecast data.

Cotton stocks are projected to drop to a five-year low this year and the key stocks-to-use ratio is seen falling to 19.2 per cent, the US Agriculture Department said in data released at its annual outlook conference. In its weekly export sales report, the U.S. Agriculture Department said U.S. cotton sales amounted to 545,900 running bales (RBs, 500-lbs each), sharply higher than the belief it would range from 200,000 to 250,000 RBs. Cotton shipment of previously booked orders hit 225,200 RBs.

Open interest in the March contract decreased by 5,055 lots at 10,530 lots as of Feb. 21.

Open-outcry volume Thursday was at 9,913 lots while 64,195 lots traded on the screen. Open interest in the cotton market jumped 14,229 lots to 278,667 lots as of Feb. 21, exchange data showed.—Reuters