Cotton prices are steadily rising, with their recent drop being progressively eliminated. International prices are relatively high, however, compared with their level in the past five years (see our graph below). With Indian production sharply up this season, cotton prices may remain at their current 60-cent level.

Cotton futures continued Wednesday slightly rising in New York, progressively eliminating the recent decrease at the start of the year.

Funds had then fled the cotton market for surging corn futures.

Corn rallied in the past weeks, as consumption is expected being boosted by rapid growth of ethanol industry.

With soybeans also increasing at the same time, US farmers are expected reducing their cotton areas this year.

As a result, production may be down and cotton prices may rebound, funds estimated.

Not surprisingly, investors are back on the cotton market where the nearby contract should continue rising in the short term.

Prices were mostly unchanged today in Asia after the A Index yesterday gained a mere 5 points.

If looking back at the past five years, the benchmark indicator for physical prices is not so low, having now reached the top of its 50-60 cent range of the past two years.

With India's production being in sharp rise this season, however, China is expected preferring less expensive Indian origins.

New York futures will suffer from a lack of US exports, as a result, and this should put pressure on physical prices in Asia.