Cotton futures in New York surged to the highest in eight weeks as traders weigh an outlook for tighter supplies this year and volatility in oil markets. The most-active futures contract climbed as much as 1.7%, to 65.76 cents per pound, the highest intraday price since November 11. 

Uncertainty over oil prices following the ouster of Venezuelan leader Nicolás Maduro could affect cotton markets, according to independent consultant Pery Pedro. Oil is typically seen as a proxy for costs of synthetic fibres, which can replace cotton in textile production. 

That’s adding to the potential for tighter supplies this year from major growers Brazil and the US, as a reduction in planted area is expected by the market given the price environment seen in recent months, according to Raphael Bulascoschi, a market intelligence analyst at StoneX. Investors who have been maintaining large short positions in cotton may also be trimming their bearish bets, he said.

“Overall, it looks like a good start to the year for commodities, and since the market was holding a heavily short position in cotton, short covering appears to be the most likely driver of the rally so far,” he said.