Cotton Prices Rise on China Supply Projections
December 17, 2009 Bloomberg
Catarina Saraiva
Cotton soared to the highest price in 17 months on speculation that a drop in China’s crop will spur demand for supplies from the U.S., the world’s biggest exporter of the fiber.
Output in China may fall by 1 million metric tons (4.59 million bales) this year, Beijing-based website cottonchina.org said today, citing Liu Xiaonan, the deputy head of the National Development and Reform Commission’s economic and trade department. The commission is a top planning agency. Cotton futures in New York have climbed 55 percent this year.
“There’s increased world demand for cotton, from China mainly,” said John Flanagan, the president of Flanagan Trading Corp. in Fuquay-Varina, North Carolina. “Their production is probably going to be about 15 percent lower than it was last year.”
Cotton futures for March delivery jumped 1.46 cents, or 2 percent, to 75.77 cents a pound on ICE Futures U.S. in New York. Earlier, the most-active contract touched 76.13 cents, the highest price since July 2008.
Output of the fiber in China, the world’s biggest producer and user, may drop 16 percent to 6.8 million tons in the year through July, the International Cotton Advisory Committee said on Dec. 1. China’s imports are projected to rise 15 percent, to 1.8 million tons, to supplement declining production.
Global cotton inventories will fall 13 percent to 10.7 million tons in the current marketing year as production declines and demand revives, the group said. A stockpile decline of that magnitude would be the steepest drop since the year that ended in July 2003, the organization said.
(Story found in original format here.)
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