NEW YORK, March 8: NY cotton futures galloped to settle Friday at a 2-year zenith on steady fund and options-linked buying, with key May expected to pierce the 60-cent psychological target soon, analysts said.

Spot March surged 1.14 cents to expire at 50.64 cents a lb, trading 48.75-51.80 cents.

Key May gained 0.47 cent to finish at 58.44 cents a lb, ranging from 57.92-58.50 cents. The day’s peak was within striking distance of the lifetime high of 58.80 cents. The benchmark contract is trading at its highest levels since early in 2001, when it was trading at 59-60 cents.

Except for two contracts, back months rose 0.25-0.50 cent.

It looks real strong. It just wants to go higher. That’s what the deal is, said Jobe Moss, broker and merchant with MCM Inc. in Lubbock, Texas.

The market has not shown even a hint of vulnerability, added a report by Mike Stevens of Swiss Financial Services in Mandeville, Louisiana.

Stevens said the market’s robust close meant the benchmark May contract remains on track to take a run at 59 and 59.50 cents and Moss said a probe of 60 cents seems likely.

The funds are long. They’re making money, said Moss, adding cotton would slosh back and then grind on up.

Based on exchange data, the funds are net long in cotton by more than 50 per cent and most players were wondering when they would liquidate their positions.

Apparently, they’re in no hurry to do that, a floor dealer said.

Moss said if US cotton sales, which reached over 300,000 running bales (RBs, 500-lbs) in the last weekly USDA export sales report, kept rising, it would be tough to beat cotton prices back.

Looking toward the USDA monthly production report due out next Tuesday, cotton industry analysts said the data should have little impact in the market.

No major changes are expected in that report, Carl Anderson, extension economist with Texas A&M University, told Reuters in a phone interview when asked for a possible reaction in the market.

The February, March and April (USDA) reports are fairly nondescript, added Sharon Johnson, cotton expert for Frank Schneider and Co. Inc. in Atlanta.

Last month, USDA pegged US 2002/04 cotton output flat at 17.14 million (480-lb) bales. The government raised US consumption to 7.6 million from 7.5 million, kept exports steady at 10.8 million and lowered ending stocks to 6.2 million against 6.3 million bales.

World cotton output was forecast at 87.64 million bales versus 87.40 in the preceding month, consumption was upped to 96.77 from 96.45 million and ending stocks were pruned to 37.85 million from 37.92 million bales.

Technically, traders said they now see resistance in the May contract at the contract high of 58.50 cents, followed by 59, 59.50 and then 60 cents. They pegged support at 57.50 and 56.30 cents.

Floor sources said estimated volume stood at 6,000 lots, versus the prior tally of 6,370 lots. Open interest in the cotton market fell 398 lots to 92,378 lots as of March 6.—Reuters