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Soft futures - Cotton rallies to 10-month high on demand hopes

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Investing.com - U.S. soft futures were mostly higher during U.S. morning trade on Thursday, with cotton prices rallying to the highest level since May ahead of the release of weekly export figures from the U.S. Department of Agriculture.

On the ICE Futures U.S. Exchange, cotton futures for May delivery traded at USD0.8948 a pound, up 1% on the day.

The May contract rose by as much as 1.1% earlier in the day to hit a session high of USD0.8950 a pound, the strongest level since May 4.

Cotton prices remained underpinned after the USDA said last week that world cotton reserves will be lower than forecast a month ago as demand increased in China, India and Bangladesh.

The agency increased its estimate for projected consumption by top consumer China to 36 million bales from 35.5 million last month.

Cotton prices have rallied nearly 15% since the start of the year on the back of strong demand from top consumer China and concerns over U.S. supplies.

Meanwhile, sugar futures for May delivery traded at USD0.1882 a pound, up 0.2% on the day. The May contract was stick in a tight trading range between USD0.1877 a pound, the daily low and a session high of USD0.1884 a pound.

Prices continued to consolidate below last week's seven-week high of USD0.1904 a pound, as traders became progressively nervous about recent gains amid the view that global supplies are more than ample to meet world demand.

Sugar prices rallied sharply last week as shipping delays out of top producer Brazil and a move towards higher ethanol production triggered short-covering buying.

The South American country is the world's largest sugar producer and exporter, with the USDA estimating the nation accounts for nearly 20% of global production and 39% of global sugar exports.

Elsewhere, Arabica coffee for May delivery traded at USD1.4043 a pound, up 0.15% on the day. The May contract held in a range between USD.14022 a pound, the daily low and a session high of USD1.4072 a pound.

Coffee prices fell to USD1.4017 a pound on Wednesday, the weakest level since February 21, as speculators pushed prices lower amid worries over sufficient global supplies.

The International Coffee Organization said last month that coffee output in Brazil and Colombia will help make up for crop losses in Central America.

Brazil is the world's largest producer and exporter of Arabica coffee, while Colombia is the world's second largest. Arabica is grown mainly in Latin America and brewed by specialty companies.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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