* Technical resistance seen at 100 day MA
NEW YORK, Aug 20 (Reuters) - Cotton prices jumped over 2 percent on Monday on technical buying after prices held above 73 cents per lb last week.
Prices have now retraced much of the ground lost since Aug. 10, when the U.S. government warned of record inventory and waning demand in the year ahead.
Cotton has built a base above 72 cents per lb as the market continues to watch for potential disruption to supplies later in the year from India, the world's No. 2 cotton producer, where planting has been hampered by weak monsoon rains.
The benchmark December cotton contract on ICE Futures U.S. jumped 2.08 percent to settle at 74.83 cents per lb.
The healthy gains helped the market hit an intraday high of 75.31 cents, just shy of the next technical resistance at the 100-day moving average which is around 76.39 cents.
Prices have recovered about 60 percent of the ground lost in the wake of the report issued on Aug. 10, as investors have brushed off weakening supply-and-demand fundamentals.
Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia, attributed the gains to a psychological shift among investors. Expectations that prices could hit 80 cents have gained traction.
"The thinking is buy in the 70s and wait for it to go higher," said Brown. Any signs of larger crops in China, the world's largest producer and consumer, could bring a dramatic end to the rally.
The market shrugged off the weekly crop progress report from the USDA, which showed an improvement in the crop condition
The latest report though reinforced concerns about the damage to the crops in the corn belt, sending grains prices on a new ride higher.
Those soaring grains prices are expected to push farmers out of fibers and into growing soybeans and corn next year, which will help to eat into the surplus washing around the market. (Reporting by Josephine Mason; Editing by David Gregorio)
Source: http://in.reuters.com/article/2012/08/20/markets-cotton-idINL2E8JKIWZ20120820
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