Chinese Cotton Buying Stirs World Market
October 22, 2009 Claudia Carpenter
Bloomberg
Cotton buying in China, the world’s largest purchaser, suggests the “trade” expects domestic prices to rise, according to Rabobank International.
China’s government may “intervene if the market reaches extreme levels,” Rabobank said in a report e-mailed today. Cotton prices on the Zhengzhou Commodity Exchange have jumped about 6 percent this month, heading for the biggest monthly gain since February 2008, according to Bloomberg data.
“Despite the recent strength in China’s market, domestic mills have been active buyers,” Rabobank analyst Luke Chandler said in the report. “Already the strength in Chinese prices has seen export interest in U.S. supplies increase.”
Cotton futures may trade at 65 cents to 75 cents a pound for the rest of the year, Chandler said by phone today. The December contract in New York was at 66.91 cents a pound at 10:32 a.m. London time. “You’re going to see prices in the 65- cent plus range because cotton is linked to gross domestic product growth,” Chandler said.
Prices have been supported as estimates of the U.S. cotton crop were lowered by the U.S. Department of Agriculture this month to 13 million bales, each weighing 480 pounds, from 13.44 million bales forecast last month. “The delayed U.S. harvest has raised concerns over the availability of nearby supplies” and higher prices have hurt textile demand, Rabobank said.
(Story found in original format here.)
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