Cotton rose to a five-week high on optimism that U.S. lawmakers will reach a budget accord, avoiding a fiscal cliff that would hurt the economy and cut commodity use. Cocoa, sugar, coffee and orange juice gained.
The world economy is in its best shape in 18 months as China’s prospects improve and the U.S. seeks to avoid the tax increases and spending cuts known as the fiscal cliff, according to the Bloomberg Global Poll of investors. The Standard & Poor’s GSCI Spot Index of 24 raw materials rose for the first time in four days.
“There is a certain amount of optimism that’s causing people to buy all commodities,” Sid Love, the president of Joe Kropf & Sid Love Consulting in Overland Park, Kansas, said in a telephone interview. “We will see support in the market until speculators decide to bail out again.”
Cotton for March delivery climbed 1 percent to settle at 73.35 cents a pound at 2:29 p.m. on ICE Futures U.S. in New York. Earlier, the price reached 73.98 cents, the highest for a most-active contract since Oct. 24.
The fiber has dropped 20 percent this year as global inventories swelled.