Cotton Exceeds $1.10
October 12, 2010 In September, noted economist Dr. O. A. Cleveland speculated that cotton prices could reach $1.25 per pound, but warned that it could be a bumpy ride.
So far, it has been. After India announced that it would lift export quotas beginning November 1, ICE December dropped to 95.00. Since that time, based on reports of harvest problems and lower yields in China, the market has begun to rally again.
Now India has decided to stop registering exports, after many leading merchants filled the export quota within 10 days of the country opening bookings, according to Bloomberg. In a story filed on Tuesday, Bloomberg reports:
Traders applied for permits to ship 5.5 million bales, the limit set by the government, and were issued licenses for 1.22 million bales at 12:28 p.m. Mumbai time, the textiles ministry said today. Fresh applications will be accepted if more cotton becomes available, the ministry said.
Futures in New York jumped to a 15-year high after the U.S. Department of Agriculture raised a forecast for demand. Global usage will reach 120.8 million bales in the year started Aug. 1, up 0.2 percent from last month’s estimate, and production will be 116.7 million bales, down from the September forecast of 117 million, the USDA said Oct. 8.
“There’s a shortage the world over and Indian exporters are trying to export more and more,” Shishir Jaipuria, managing director of Ginni Filaments Yarn, said from New Delhi.
Futures for December delivery gained as much as 2.3 percent to $1.0964 a pound on ICE Futures U.S. Prices in India reached a record last week after an extended monsoon delayed harvesting.
Now that India has suspended export quotas, the question remains: Where is the top? As of this morning, cotton touched 112.38.
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