NY cotton ends up sharply, weather threatens new crop

05/25/2011
* US drought, floods continue to boost December prices
* Dec posts steep gains for second day
* Planting days diminishing with no break in bad weather

NEW YORK, May 25 (Reuters) - Cotton finished Wednesday with steep gains for a second day in a row, as two fronts of bad crop weather jeopardized the new planting season, leading participants to bet on a diminished crop in the United States. Cotton's new-crop, December, ended up 5.59 cents, or 4.44 percent, at $1.3135 per lb on ICE Futures US. Earlier, it reached a high last seen on April 26, a day after the contract posted its biggest gain since March 31, when it rose nearly 6 percent. ICE'S benchmark July cotton futures also settled with strong gains of 2.15 cents at $1.5603 per lb, a 1.40 percent rise. Trading volume in the December contract stood at around 8,418 lots, not far behind July's 9,052 lots. Overall volume on ICE cotton for Tuesday came to 20,112 lots and was above the 30-day average, after falling 70 percent below the norm on Monday, Thomson Reuters' data showed. "On the December cotton, I think it's the same fears about weather, whether it's the West Texas drought, that's now moving into South Georgia or the floods up and down the Mississippi (River)," said "We can afford to have a problem in one region, but not in two and certainly not three, during prime planting season," said Sharon Johnson, senior cotton analyst at Penson Futures. Weather woes in the United States have been wrecking havoc on crops. Farmers along the swollen Mississippi River have had to contend with severe floods lately that have drowned thousands of acres of cotton. The actual number of acres lost in both Texas and the U.S. Delta states will not be known until the middle of June, analysts said. December and the back months in the cotton market are being supported by a severe drought savaging cotton crops in Texas, the biggest cotton growing state in the country.