Cotton Rises on Expectation that Chinese Imports will Increase
July 31, 2009 Bloomberg
Cotton rose the most in almost three weeks on expectations of rebounding demand from China .
Chinese yarn production in the first half of the year increased 9.4 percent to 11 million metric tons from a year earlier, according to the National Bureau of Statistics in Beijing. That may signal an increase in cotton purchases by the country’s spinning mills, according to Andy Ryan, a risk-management consultant for broker FCStone Group Inc.
Expected to gain substantially from increased Chinese demand is the U.S., where cotton exports in the year starting August 1 may be higher than the 10.2 million bales projected by the United State Department of Agriculture. Estimates for China’s imports range from 10 million to 12 million bales, compared with the USDA forecast of 8 million bales.
The U.S., the biggest fiber exporter, may ship 10.5 million bales overseas next year with the global economy “in a recovery mode,” said Joe Nicosia, the chief executive officer of Cordova, Tennessee-based merchant Allenberg Cotton Co. Exports may reach 13 million bales “if demand takes off and we have a good recovery,” he said earlier this week.
“We’re getting good inquiries from China, and we’re going to do business in China,” Jarral Neeper, the president of Bakersfield, California-based cotton cooperative Calcot Ltd., said on July 28. He estimates China will import 12 million bales in the new marketing year and U.S. exports may reach 11 million bales.
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