Futures Rise as China’s Cotton Demand Grows
September 16, 2009 Elizabeth Campbell
Cotton futures advanced to a four- week high on signs that demand may rise as the economy expands in China, the world’s largest fiber consumer.
Industrial production in China, also the largest cotton producer, climbed more than forecast in August, lending unexpectedly rose and retail sales advanced. The dollar’s slump against major currencies enhanced the appeal of raw materials. The U.S. is the biggest fiber exporter.
“Due to the dollar making new 52-week lows and positive Chinese economic data, cotton prices broke out to the upside,” Mike Stevens, a Swiss Financial Services analyst in Mandeville, Louisiana, said in a note.
Cotton futures for December delivery rose 0.32 cent, or 0.5 percent, to 61.24 cents a pound on ICE Futures U.S. in New York. Earlier, the price reached 62.29 cents, the highest level for a most-active contract since Aug. 14. The fiber gained 2.7 percent this week.
U.S. Department of Agriculture statistics on supply and demand, released today, were “slightly friendly,” said Peter Egli, a director of risk management at Plexus Cotton Ltd. in Phoenix.
In the year ending July 31, global production will be 105.06 million bales, down from 105.87 million projected last month, the agency said. Inventories will be an estimated 56.26 million, down 2.1 percent from August. A bale weighs 480 pounds, or 218 kilograms.
The dollar extended a slide to the lowest level in almost a year against a basket of six major currencies.
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