Cold Front in China Lifts Cotton Prices to Record High
October 26, 2010 Bloomberg
A cold front moving across China may damage crops and boost demand for heating fuels, potentially boosting coal prices trading at their highest level in more than two months. Cotton jumped to a record.
Strong winds from the north are affecting most of China, bringing rain and cold temperatures, the China Meteorological Center said. The weather will hamper harvesting, it said in a statement yesterday.
Cotton in China and New York gained to records on concern hailstorms damaged crops in Texas, the largest U.S. grower, and forecasts for cold weather in the Asian nation. China has faced power shortages in past winters, when heating demand surged and heavy snow disrupted road and rail transportation of coal, which fuels about 80 percent of its power stations.
“Cotton prices in China are completely out of control, with the news of hail in Texas and cold weather in China all fueling the concern about tight supply,” Yuan Renqing, analyst at Baocheng Futures Co., said by phone from Jinan, Shandong.
Cotton futures on the Zhengzhou Commodity Exchange climbed by the daily 5 percent limit to 26,270 yuan ($3,947) a metric ton, the highest ever. December contracts on ICE Futures U.S. in New York gained to a record $1.2471 a pound.
(Update, Tuesday, October 26, 2:00 p.m. CDT: At the close, ICE December 2010 was at 129.59, up 488. December 2011 was at 89.89, down 04.)
In China, “low temperatures and rains will slow down the harvesting of cotton and hurt fiber quality,” the meteorological center said. “It will also make it hard for the drying and storage of grains that have already been harvested.”
Inner Mongolia, Hebei, Shandong, Jiangsu and large parts of the country’s northeast will see temperatures fall by 14 to 16 degrees Celsius, the report said. Farmers in the south are still planting winter wheat and rapeseed crops along the Yangtze River are in the seedling stage, the center said. Harvesting of cotton is continuing in Xinjiang, it said.
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