Cotton Soars to Record as Chinese Demand Surges, Global Supply Wanes
January 25, 2011 Bloomberg
Cotton futures soared to a record on speculation that global supplies will fail to keep pace with rising demand in China, the world’s largest user.
Chinese imports surged 86 percent in 2010 as economic growth lifted demand from textile mills and adverse weather hurt the domestic crop. The country’s purchases may increase before next month’s Lunar New Year holidays, said Han Sung Min, a broker at Korea Exchange Bank Futures Co. On Jan. 12, the U.S. government cut its global-production outlook. Prices have more than doubled in the past year.
“Cotton was supported by China’s import data and speculation that the country will buy more” as the holidays approach, Seoul-based Han said.
Cotton for March delivery advanced by the exchange limit of 5 cents, or 3.2 percent, to settle at an all-time high of $1.6194 a pound at 2:56 p.m. on ICE Futures U.S. in New York. The most-active contract climbed 11 percent last week, the most since Dec. 3.
September-delivery cotton on the Zhengzhou Commodity Exchange rose as much as 6.7 percent to 32,530 yuan ($4,940) a metric ton, the highest price since Nov. 10.
“This is spillover buying from Chinese exchanges,” said Mike Stevens, an independent trader in Mandeville, Louisiana. “Cotton prices have exploded in China.”
(Story found in original context here.)
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