Cotton Rises as Mills Build Supplies to Meet Textile Orders
May 26, 2009 Bloomberg
Cotton prices rose on Friday on speculation that demand will climb as mills replenish supplies to meet an increase in textile orders.
Demand in the year that begins August 1 may rise 2.3% to 23.265 million metric tons from a year earlier. Recent reports from a number of key raw-cotton consuming markets point to a growing recovery in spinning activity.
Declines in mill capacity far exceeded slowing consumption, Ron Lawson, a managing director at Lawson/O’Neill Global Institutional Commodity Adivsors LLC in Sonoma, California, said yesterday. “The huge vacuum requires quite a bit of cotton to fill in.”
Before Friday, the nearby contract had gained 16% this year as declines in global production outpaced dwindling demand.
U.S. export sales of Upland cotton were higher than expected at 141,144 running bales in the week ended May 14, Sharon Johnson, a senior cotton analyst at First Capitol Group in Atlanta, said Thursday in a report. Shipments of 445,206 bales were the highest in the year that started August 1, she said.
To achieve the annual export target of 12.5 million bales, weekly shipments need to average 236,000 bales in the 11 weeks left in the current marketing year, Johnson said.
Before the holiday weekend in the U.S., speculators and hedge funds are unwinding bets that prices will fall, said John Flanagan, the president of Flanagan Trading Corp. in Fuquay- Varina, North Carolina.
ICE was closed Monday for Memorial Day.
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