NY cotton rises almost 1 pct in light volume


* Growers holding out for 80 cents/lb

* Volume well below 30-day and 250-day averages

* Speculators cut bullish bets – CFTC data

NEW YORK, Aug 17 (Reuters) – Cotton prices rose almost 1 percent on Friday as the market continued to recover from the recent sell-off after the U.S. government’s bearish supply-and-demand report.

The recent see-saw trading continued on light volumes as the market waited for news from India, the world’s No. 2 cotton producer, where planting has been hampered by weak monsoon rains.

Traders also hope for signs that textile mills in China, the world’s largest consumer, are preparing for fresh purchases.

The benchmark December cotton contract on ICE Futures U.S. rose 0.97 percent to 73.3 cents per lb. With just under 9,500 contracts traded, volumes were half the 250-day average and a third below the 30-day average.

Strength in grains also aided fibers.

Even after rising more than 1 percent on the week, the market was still vulnerable. The closely watched 14-day Relative Strength Index (RSI) remained around 38, according to Reuters data. A reading below 30 would signal an oversold position.

Prices slumped 7 percent from as high as 77 cents in the wake of the U.S. government’s latest supply-and-demand report last week.

The market remained on weather watch after heavier monsoon rains in some areas of India, bringing relief to farmers, although planting is still behind last year due to overall weakness in the seasonal rains.

Texas, the largest growing area in the United States, received some rain on Friday, with more forecast over the weekend to help crops parched after a month-long dry spell.

But producers are holding out for higher prices if the lack of rain in the state damages crops.  Any gains could likely to be short-lived though given the record surplus weighing on the market, market participants said.

“If there’s no rain in India or Texas, it could go to 80 cents. Farmers are looking for a chance to do some pricing,” said a U.S. broker.

Speculative investors, such as hedge funds, cut their bullish bets on fiber prices in the week to Aug. 14,  U.S. Commodity Futures Trading Commission (CFTC) data showed on Friday.

The drop in the net long reflects the poor sentiment in the wake of the monthly government report a week ago.

(Reporting by Josephine Mason; editing by Carol Bishopric)

Source: http://www.reuters.com/article/2012/08/17/markets-cotton-idUSL2E8JHKJY20120817