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Cotton futures

surge

NEW YORK: New York cotton futures settled sharply higher Friday amid heavy speculative short covering, market sources said.

The rally, which briefly carried the nearby positions to their 200-point upward trading limit, was mainly a correction from an oversold condition established during the previous two sessions, traders said.

Day traders were good buyers at the open, and commodity funds stepped in to cover short positions when the early gains held.

"Now is just as good a time as any to stage a correction," said Merrill Lynch analyst Judy Ganes.

But the market's overall downtrend remained intact despite today's retracement, she said.

Although industry analysts continue to predict a bumper crop for 1995-96, concern that the cotton would be late in arriving on the market helped to buoy the October position, heightening its premium to second-month December.

December rose 1.10 cents a lb, to 72.35 cents, after rising its two-cent limit earlier in the session. October gained 1.63, to 74.70, while the rest were up 0.60 to 0.90.

The day's volume was estimated at a moderate 6,250 lots.-Reuter