ICE cotton hits October highs after U.S. exports beat forecasts


* Fiber jumps as much as 2.8 pct after weekly USDA report

* Benchmark contract closes above 200-day MA of 83.90 cts/lb

* Spot cotton prices poised to end year up 12 pct

NEW YORK, Dec 27 (Reuters) – ICE cotton pared gains after vaulting over its 200-day moving average to early October highs on buy stops on Friday, as strong U.S. weekly export sales data and bullish technical signals drove renewed speculator buying.

The most-active March cotton contract on ICE Futures U.S. closed up 1.23 cents, or 1.5 percent, at 84.12 cents a lb, paring gains that propelled it as high as 85.20 cents.

Fiber was the best performer across commodities markets. Twelve of the 19 components in the benchmark Thomson Reuters/Core Commodity CRB advanced.

Global financial markets rallied as investor sentiment improved.

The U.S. dollar index fell, buoying dollar-traded commodities as it makes them less expensive to holders of other currencies.

The benchmark March contract breached and closed above its key 200-day moving average at 83.90 cents.

Spot cotton prices finished the week higher and on track to end the year up 12 percent after slating huge losses in 2011 and 2012.

Even as U.S. government export data for the week ended Dec. 19 was down from previous weeks, sales beat expectations as futures were between 82 and 84 cents a lb throughout the reporting period.

The data showed that demand has remained stout despite a 10-percent run-up from a November trough of 76.65 cents a lb.

“Speculators are coming in as they continue to see the strong export sales. … The idea that the mills won’t follow the market out of the 70s (cents) is wrong,” said a U.S. broker.

Beijing will replace its controversial cotton and soy stockpiling programs with crop subsidies, according to a report from official Xinhua news agency that did not include a timeline for the overhaul.

Traders eye any news on China’s plans to shift away from the reserve-building program launched in 2011, as it has driven voracious demand for foreign fiber and pegged a floor under global prices.

This week, China lowered quality requirements for reserve buying in three provinces where a natural disaster hurt crop quality and constrained purchase volumes, the China Cotton Association said on its website on Wednesday.

ICE inventories were unchanged from the previous session at 35,315 bales on Thursday, but down sharply from above 225,600 bales at the start of the month, according to the most recent exchange data compiled by Reuters.

A sense of tight U.S. supplies due to a small crop in the world’s top exporter has thrown the market into a backwardation.

A premium for nearby prices is considered unusual in a market expected to see a record surplus by the end of the crop year on July 31, 2014 as global output continues to outstrip demand. (Reporting by Chris Prentice; Editing by Richard Chang)

Source: Reuters