* Prices steady for another session as dealers absent
* Investors cautious amid slew of U.S. economic data
* ICE inventories tick down with Dec. delivery underway
NEW YORK, Dec 4 (Reuters) – Cotton futures advanced on Wednesday as producers held off selling for higher prices and light mill and investor short-covering underpinned prices.
The most-active March cotton contract on ICE Futures U.S. <CTc2 closed up 0.44 cent, or 0.6 percent, at 79.05 cents a lb.
Volumes picked up slightly from the previous session’s low levels, preliminary Thomson Reuters data showed.
In other markets, U.S. stocks fell back after a brief rebound. Investors stayed skittish as the week’s slew of U.S. data, ending with the jobs report on Friday, has stoked worry the Federal Reserve may reduce its huge fiscal stimulus program because of signs of economic strength.
The Thomson Reuters/Core Commodity CRB index, a benchmark for global commoditiesmarkets, climbed to more than one-month high.
Most traders remained on the sidelines as cotton’s cash demand was sluggish.
Total market open interest continued to languish near the lowest levels since January 2012 as speculators have abandoned a large bullish stance in favor of a small bearish one.
“We’ve got some light buying under the market here, some of it is mill-related. The spec mindset may (also) be changing,” Sharon Johnson, a cotton specialist at KCG Futures in Atlanta, said of the covering of their net short position.
Johnson cited 80 cents as a key psychological level for most producers to continue selling recently harvested bales.
Traders eyed the U.S. Department of Agriculture’s monthly supply-and-demand report due next week for market direction.
Market focus is on top consumer China, where buying for a government stockpiling program has so far outpaced state reserve auctions, dealers said.
The government stockpiling program that was launched in 2011 has placed a floor under the global market and kept China’s textile mills hungry for foreign fiber as Beijing’s hold on world inventories has grown.
The spot December contract closed up 0.61 cent, or 0.8 percent, at 78.02 cents per lb ahead of its Dec. 6 expiration.
Exchange inventories ticked down to 206,811 bales from 225,614 bales previous as the December delivery period was underway. (Reporting by Chris Prentice; Editing by Peter Galloway)