Cotton Rises to Fifth Straight Record On Global Supply Concern
November 9, 2010 Bloomberg
Cotton futures advanced to a record for the fifth straight session Monday on concern that a decline in production in China, the world’s biggest user, will boost imports and drain global inventories.
The harvest in China may fall 5 percent this year because of natural disasters in producing regions such as Xinjiang and Changjiang, Caijing Online said on Nov. 6, citing the Rural Economy Department at the National Development and Reform Commission. Output was 6.4 million metric tons in the year ended Aug. 31, down 15 percent, an industry group said on Sept. 27.
“It looks like China is going to keep buying,” said Sid Love, the president of Joe Kropf & Sid Love Consulting Services LLC in Overland Park, Kansas. “There is an absence of sellers.”
Cotton for December delivery jumped by the exchange limit of 4 cents, or 2.8 percent, to a record $1.4623 a pound at 9:34 a.m. Monday on ICE Futures U.S. in New York. Last week, the commodity gained 14 percent, the most since November 2008.
Before today, cotton surged 88 percent this year, the most among 19 raw materials in the Thomson Reuters/Jefferies CRB Index.
“It’s not just a story about supply and demand, but investment demand as well,” said Ker Chung Yang, an analyst at Phillip Futures Pte. in Singapore.
Stockpiles in the U.S., the largest exporter, may be 2.56 million bales by July 31, smaller than the Oct. 8 estimate from the U.S. Department of Agriculture of 2.7 million bales, as exports rise, according to the average estimate of 10 analysts surveyed by Bloomberg News last week.
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