NEW YORK, Jan 12: Cotton futures finished on Friday shy of a five-week high with gains of nearly 4.5 per cent, when a tepid, rather than bearish, supply/demand report left traders thinking this week’s selling had been overdone, brokers said.

Mike Stevens of Swiss Financial Services in Mandeville, Louisiana said he thought the USDA report accounted for about 50 to 60 points of the rally, but technical factors and a knock-on effect from surging grain prices lifted benchmark cotton to its highest close since Sept. 27.

ICE Futures’ open-outcry March cotton contract settled 4.48 per cent higher at 69.96 cents a lb, up 3.0 cents, its highest level since Nov. 7 and matching the Sept. 27 closing level.

Heavy buying towards session end sent cotton futures to its trading limit for a single day prompting ICE to stop trade in the contract early. Electronic trade will resume at its usual time, an exchange spokeswoman said.

March cotton gapped up at the start to set a low at 68.10 a lb. On Thursday, heavy selling sent the contract to 66.96, its lowest since Dec. 26, by the finish.

May cotton advanced 3.0 cents to end at 71.64 cents a lb. The rest advanced 1.68 to 3.0 cents by the close, with several contracts setting new lifetime highs.

ICE March electronic cotton futures also surged 3.0 cents to the 69.96 cents a lb high.

Volume was a hefty 24,774 lots before trading was stopped.

Brokers said the surge in cotton prices had less to do with supply/demand fundamentals and more with speculative buyers rushing to buy back cotton as wheat and corn prices shot up.

The cotton market surprised everyone because it looked like we could be going down even further. But once we took out Thursday’s high, the die was cast. At that point you had corn, wheat and soybeans soaring limit up, and everyone who got out of cotton yesterday jumped back in, said Stevens.

Robust buying began in the electronic cotton market before the open of floor trade after the US Department of Agriculture released its January supply/demand report.

Though USDA downwardly revised many key cotton figures, analysts said larger revisions had been expected.

USDA estimated the 2007/08 US cotton crop at a larger 19.03 million (480-lb) bales than last month’s 18.99 million bales outlook.—-Reuters