Cotton Prices Rise as Dollar Declines
June 4, 2009 Bloomberg
Cotton prices rose for the fourth time in five sessions as the dollar’s decline increased the appeal of commodities as a hedge against inflation. Orange juice dropped.
The greenback declined against a basket of six major currencies, while the Reuters/Jefferies CRB Index of 19 raw materials gained 2.6 percent. U.S. export sales of cotton jumped 47 percent in the week ended May 28 from a week earlier, Department of Agriculture data show.
“Commodities in general are rising on inflation fears, and cotton is caught up in it,” said Frank Weathersby, the president of Affinity Trading LLC in Fort Walton Beach, Florida.
Cotton futures for July delivery rose 1.04 cents, or 1.9 percent, to 56.88 cents a pound on ICE Futures U.S. in New York. The most-active contract has jumped 16 percent this year as declines in global production outpaced slowing demand.
U.S. equities rose for the fifth time in six sessions. A government jobs report today signaled the worst phase of the employment slump may have passed.
The cotton rally “looks like a delayed reaction to super strong outside markets,” said Mike Stevens, an analyst at Swiss Financial Services in Mandeville, Louisiana.
Export sales were “at the high end of expectations” at 152,314 running bales, and shipments were also “good,” John Flanagan, the president of Flanagan Trading Corp. in Fuquay- Varina, North Carolina, said in a report.
The U.S. is the world’s largest cotton exporter. China is the leading consumer and buyer of U.S. fiber. A running bale weights 500 pounds, or 227 kilograms.
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