Shrinking Supply Leads to Rise in Cotton Prices
May 20, 2010 Bloomberg
Elizabeth Campbell
Cotton prices rose the most in three weeks amid shrinking global inventories and adverse weather in China, the world’s biggest grower and consumer.
In the year starting August 1, global stockpiles will fall to 50.13 million bales from an estimated 52.75 million this year, the U.S. Department of Agriculture has estimated. A bale weighs 480 pounds, or 218 kilograms. About 74,000 mu (12,190 acres) of cotton was hurt by snow on May 15 in southern Xinjiang, China’s largest producing region, China News reported.
“Cotton has very strong bullish fundamentals,” said Keith Brown, the president of Keith Brown & Co., a brokerage in Moultrie, Georgia. The market is “a little unsure about getting the new crop established, especially with weather in China,” he said.
Cotton for July delivery rose 1 cent, or 1.2 percent, to 82.2 cents a pound on ICE Futures U.S. in New York, the biggest gain for a most-active contract since April 23. Prices have rallied 8.7 percent this year.
Crops in the Chinese province of Jiangxi may have been damaged by flooding, said David Streit, a meteorologist at Commodity Weather Group LLC in Bethesda, Maryland.
“There is talk about bad weather continuing in parts of China,” said Sharon Johnson, a senior analyst at First Capitol Group LLC in Atlanta.
(Story found in original format here.)
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