NEW YORK, June 18: US cotton futures finished higher Friday, recovering from a three-week low on short-covering stemming from worries about one of the worst droughts in the history of growing areas of Texas.

The market shrugged off a two-day selling spree sparked by fears of a Greek default in the euro zone as players were wary of going home short in cotton with the weekend coming up.

The key Dec cotton contract on ICE Futures US rose 3.59 cents to finish at $1.2377 per lb, ranging from $1.1787 to $1.2462.

On Thursday, the contract closed at $1.2018 in the lowest finish for the third position cotton contract in nearly three weeks.

Total volume traded Thursday reached nearly 11,100 lots at 2:50 p.m. EDT (1850 GMT), some 40 per cent below the 30-day norm, Thomson Reuters preliminary data showed.

They’re (investors) buying it off the drought in Texas, said Jobe Moss, an analyst for brokers and merchants MCM Inc in Lubbock, Texas.

Traders said the investors who dumped cotton at the height of the euro zone induced sell-off flocked back into the market and reestablished their positions in cotton.

Stocks and the euro rose Friday after the leaders of France and Germany hinted at an aid deal to save Greece from default, but investors remained on edge until a deal is reached.

The weather forecast for Texas calls for more dry and hot weather through the weekend and into Tuesday with temperatures on Saturday expected to peak at 107 degrees Fahrenheit (42 Celsius), a report by forecaster Telvent DTN said.

Aside from Texas, traders are also mulling how much damage was done to cotton in Georgia, the second biggest producing state, and the floods which struck several southern US states along the Mississippi river.—Reuters