SINGAPORE, Mar 13 (Reuters): ICE cotton futures jumped more than 2.0 per cent to a near three-month high on Tuesday, as investors bid up the natural fiber in anticipation of a possible trade deal between the United States and China, while a weaker dollar provided further support.
The most active cotton contract on ICE Futures US, the May contract , settled up 1.65 cents, or 2.25 per cent, at 74.85 cents per lb.
The front-month hit its highest level since Dec. 21 at 75.00 cents per lb.
"Cotton is higher on optimism regarding US-China trade talks and rumors of recent strong export sales of US cotton," said Louis Rose, director of research and analytics at Tennessee-based Rose Commodity Group.
"These factors likely are forcing some spec short-covering," Rose said.
The United States and China may be in the final weeks of talks to hammer out a deal and an agreement will open up a lot of agricultural sales, US Trade Representative Robert Lighthizer said.
The United States is the world's biggest cotton exporter, while China is the top consumer.
The dollar index was down 0.3 per cent, lending further support to cotton prices.
A weaker greenback makes commodities priced in dollars, such as cotton, less expensive for holders of other currencies.
Total futures market volume rose by 20,888 to 41,458 lots.
Data showed total open interest gained 1,255 to 221,092 contracts in the previous session.
Certificated cotton stocks deliverable as of March 11 totaled 112,228 480-lb bales, down from 123,219 in the previous session.
